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Cortez Company updates its inventory records perpetually.The company's records showed a beginning inventory of $1,800,cost of goods sold of $4,200,and ending inventory of $2,400.How much inventory was purchased during the year?


A) $3,600
B) $3,000
C) $2,700
D) $4,800

E) A) and B)
F) None of the above

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Which of the following statements about the lower of cost or market rule/net realizable value is not correct?


A) The lower of cost or market/net realizable value rule sometimes causes the book value of inventory to be written down below cost,but will never cause the book value of inventory to be increased above cost.
B) The amount of inventory write-down is an expense which most companies report as cost of goods sold.
C) Lower of cost or market is an inventory cost method used to determine cost of goods sold and ending inventory.
D) The lower of cost or market/net realizable value (LCM/NRV) rule results in reporting inventory conservatively,at an amount that does not exceed its actual value.

E) B) and C)
F) A) and C)

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Match the term to the appropriate definition.There are more definitions than terms. -Cost of Goods Sold


A) Inventory costing method that identifies the cost of the specific item that was sold.
B) Inventory costing method that assumes that the costs of the first goods purchased are the costs of the first goods sold.
C) The difference between net sales and cost of goods sold.
D) The inventory that starts the manufacturing process.
E) Inventory items being transported.
F) Consists of products acquired in a finished condition,ready for sale without further processing.
G) A valuation rule that requires Inventory to be written down when its market value falls below its cost.
H) The expense that follows directly after Net Sales on a multiple step income statement.
I) Beginning Inventory + Purchases - Cost of Goods Sold
J) Goods a company is holding on behalf of the goods' owner.
K) Inventory costing method that assumes that the costs of the last goods purchased are the costs of the first goods sold.
L) Requires that if LIFO is used on the income tax return,it also must be used in financial statement reporting.
M) Beginning Inventory + Purchases - Ending Inventory
N) Goods that are in the process of being manufactured.
O) Inventory costing method that uses the weighted average unit cost of the goods available for sale for both cost of goods sold and ending inventory.
P) Goods that are held for sale in the normal course of business or are used to produce other goods for sale.
Q) How many times (on average) that inventory has been bought or sold.
R) Inventory that was in process and now is completed and ready for sale.
S) A measure of the average number of days from the time inventory is bought to the time it is sold.

T) Q) and S)
U) D) and S)

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LIFO uses the ________ unit costs for cost of goods sold on the income statement and the ________ unit costs for inventory on the balance sheet.


A) newest;oldest
B) oldest;oldest
C) oldest;newest
D) newest;newest

E) A) and D)
F) B) and C)

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Match the term to the appropriate definition.There are more definitions than terms. -Cost of Goods Sold Equation


A) Inventory costing method that identifies the cost of the specific item that was sold.
B) Inventory costing method that assumes that the costs of the first goods purchased are the costs of the first goods sold.
C) The difference between net sales and cost of goods sold.
D) The inventory that starts the manufacturing process.
E) Inventory items being transported.
F) Consists of products acquired in a finished condition,ready for sale without further processing.
G) A valuation rule that requires Inventory to be written down when its market value falls below its cost.
H) The expense that follows directly after Net Sales on a multiple step income statement.
I) Beginning Inventory + Purchases - Cost of Goods Sold
J) Goods a company is holding on behalf of the goods' owner.
K) Inventory costing method that assumes that the costs of the last goods purchased are the costs of the first goods sold.
L) Requires that if LIFO is used on the income tax return,it also must be used in financial statement reporting.
M) Beginning Inventory + Purchases - Ending Inventory
N) Goods that are in the process of being manufactured.
O) Inventory costing method that uses the weighted average unit cost of the goods available for sale for both cost of goods sold and ending inventory.
P) Goods that are held for sale in the normal course of business or are used to produce other goods for sale.
Q) How many times (on average) that inventory has been bought or sold.
R) Inventory that was in process and now is completed and ready for sale.
S) A measure of the average number of days from the time inventory is bought to the time it is sold.

T) H) and M)
U) A) and O)

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If a company uses LIFO to prepare its U.S.tax return,then it must use LIFO to prepare its financial statements.

A) True
B) False

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The records of Alberta Inc.included the following information:  Cost of goods sold $1,800,000 Begirniring irventory 435,000 Ending irventory 465,000\begin{array} { l r } \text { Cost of goods sold } & \$ 1,800,000 \\\text { Begirniring irventory } & 435,000 \\\text { Ending irventory } & 465,000\end{array} What is the inventory turnover ratio?


A) 3.87 times
B) 4.00 times
C) 4.14 times
D) 2.00 times

E) C) and D)
F) None of the above

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The process of buying and selling inventory is known as inventory:


A) circulation.
B) management.
C) turnover.
D) allocation.

E) None of the above
F) C) and D)

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A company uses a weighted-average perpetual inventory system.The following transactions took place during the month of August:  August 210 units were purchased at $12 per unit  August 1815 units were purchased at $15 per unit  August 2920 units were sold  August 3114 units were purchased at $16 per unit \begin{array}{|l|l|}\hline \text { August } 2 & 10 \text { units were purchased at } \$ 12 \text { per unit } \\\hline \text { August } 18 & 15 \text { units were purchased at } \$ 15 \text { per unit } \\\hline \text { August } 29 & 20 \text { units were sold } \\\hline \text { August } 31 & 14 \text { units were purchased at } \$ 16 \text { per unit } \\\hline\end{array} What is the per-unit value of ending inventory on August 31? (Round each per unit cost to 2 decimal places. )


A) $12.00
B) $13.80
C) $15.42
D) $16.00
E) $17.74

F) A) and D)
G) C) and D)

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Sun Concepts sells and installs solar energy products.Information from the financial statements for the last two years revealed the following:  Beginning Inventory  Ending Inventory  Cost of Goods Sold  Year 1 $90,000$130,000$605,000 Year 2 130,000110,000720,000\begin{array}{cccc} & \text { Beginning Inventory } & \text { Ending Inventory } & \text { Cost of Goods Sold } \\\text { Year 1 } & \$ 90,000 & \$ 130,000 & \$ 605,000 \\\text { Year 2 } & 130,000 & 110,000 & 720,000\end{array} The number of days to sell in Year 2 was approximately:


A) 75 days
B) 66 days
C) 61 days
D) 73 days

E) A) and B)
F) A) and C)

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Which one of the following statements about inventory is not correct?


A) An increase in inventory levels is always a sign of inefficiency in inventory management.
B) The measurement of inventory affects both the balance sheet and the income statement within an accounting period.
C) The ending inventory of one accounting period becomes the beginning inventory of the next accounting period.
D) The cost of inventory can vary over time and may be affected by technological innovation.

E) A) and B)
F) All of the above

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An overstatement of beginning inventory causes net income to be overstated.

A) True
B) False

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Assume the periodic inventory method is used.When LIFO is used,costs are assigned to cost of goods sold using the most recent purchase at the time of the sale.

A) True
B) False

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Alphabet Company,which uses the periodic inventory method,purchases different letters for resale.Alphabet had no beginning inventory.It purchased A thru G in January at $4 per letter.In February,it purchased H thru L at $6 per letter.It purchased M thru R in March at $7 per letter.It sold A,D,E,H,J and N in October.There were no additional purchases or sales during the remainder of the year. If Alphabet Company uses the specific identification method,what is the cost of its ending inventory?


A) $31
B) $69
C) $76
D) $100

E) A) and B)
F) C) and D)

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A fire destroyed some of Cholla,Inc.'s records.Information from the documents found related to inventory is listed below. A fire destroyed some of Cholla,Inc.'s records.Information from the documents found related to inventory is listed below. What was the amount of inventory that was purchased during the year? A) $860,400 B) $1,017,000 C) $741,600 D) $898,200 What was the amount of inventory that was purchased during the year?


A) $860,400
B) $1,017,000
C) $741,600
D) $898,200

E) A) and B)
F) A) and C)

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Nordic Industries uses a periodic inventory system.During its first month of operations,Nordic Industries purchased inventory as follows: Nordic Industries uses a periodic inventory system.During its first month of operations,Nordic Industries purchased inventory as follows: There were 100 units in ending inventory on January 31. Under the weighted average cost method,what is the cost of goods sold for January? A) $18,000 B) $20,250 C) $3,150 D) $2,250 There were 100 units in ending inventory on January 31. Under the weighted average cost method,what is the cost of goods sold for January?


A) $18,000
B) $20,250
C) $3,150
D) $2,250

E) None of the above
F) A) and D)

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The primary goals of inventory managers are to maintain a sufficient quantity of inventory to meet customers' needs,ensure inventory quality meets customers' expectations and company standards,and minimize the cost of acquiring and carrying inventory.

A) True
B) False

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A company had inventory on November 1 of 5 units at a cost of $20 each.On November 2,the company purchased 10 units at $22 each.On November 5,the company sold 8 units for $55 each.On November 6,the company purchased 6 units at $25 each.The company uses a perpetual inventory system.Using the weighted average method,what is the value of the ending inventory on November 30? (Round each per unit cost to 2 decimal places and then round your answer to the nearest whole dollar. )


A) $304
B) $404
C) $299
D) $280

E) C) and D)
F) B) and D)

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Ending inventory = Beginning inventory + Purchases − Cost of goods sold

A) True
B) False

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Assume a periodic inventory system is used.Which inventory costing method generally results in the cost of the first goods purchased being assigned to ending inventory?


A) FIFO
B) LIFO
C) Weighted average cost
D) Simple average cost

E) A) and D)
F) A) and B)

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