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Exam 6: Inventories

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Question 61

Multiple Choice

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The number of days' sales in inventory measures​

A) ​the length of time it takes to acquire,sell,and replace the inventory
B) ​the length of time it takes to acquire and receive payment for the inventory
C) ​the number of days inventory is on hand prior to sale
D) ​the number of days inventory takes to arrive after ordering

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

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Question 62

Multiple Choice

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During a period of falling prices,which of the following inventory methods generally results in the lowest balance sheet amount for inventory?

A) average cost method
B) LIFO method
C) FIFO method
D) cannot tell without more information

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

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Question 63

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Inventory controls start when the merchandise is shelved in the store area.

On the basis of the following data,determine the estimated cost of the inventory as of March 31 by the retail method,presenting details of the computation in good order.

Cost flow is in the order in which costs were incurred when using

Three identical units of merchandise were purchased during July,as follows: ​ Assume one unit sells on July 28 for $45. Determine the gross profit,cost of goods sold,and ending inventory on July 31 using (a)first-in,first-out,(b)last-in,first-out,and (c)average cost flow methods.

The firm uses the periodic system,and there are 20 units of the commodity on hand at the end of the year.What is the amount of inventory at the end of the year according to the LIFO method?

Assuming that the company uses the perpetual inventory system,determine the gross profit for the sale of May 23 using the FIFO inventory cost method.

If inventory is being valued at cost and the price level is steadily rising,the method of costing that will yield the highest net income is

Assuming that the company uses the perpetual inventory system,determine the gross profit for the month of May using the LIFO cost method. ​

Under a periodic inventory system

Using a LIFO perpetual cost flow,calculate the value of the ending inventory and the cost of goods sold for the month of November of Beamer Company using the data below. ​ Nov.1 Purchased 600 units $80 each 4 Sold 200 units 11 Purchased 350 units $82 each 12 Sold 275 units 22 Purchased 175 units $84 each 23 Sold 155 units ​ Calculate the following: (a)Inventory valuation at the end of November (b)Calculate the cost of goods sold for November

A subsidiary inventory ledger can be an aid in maintaining inventory levels at their proper levels.

A consignor who has goods out on consignment with an agent should include the goods in ending inventory even though they are not in the possession of the consignor.

Average inventory is computed by adding the inventory at the beginning of the period to the inventory at the end of the period and dividing by two.

On the basis of the following data for Sanford Industries as of December 31,determine the value of the inventory at the lower of cost or market.Also,show how the inventory would appear on the balance sheet (assume that the cost was determined by the FIFO method).Apply lower of cost or market to each inventory item.

List the internal control objectives illustrated by the following:

The units of Manganese Plus available for sale during the year were as follows: ​ There are 15 units of the product in the physical inventory at November 30.The periodic inventory system is used.Determine the inventory cost by (a)FIFO,(b)LIFO,and (c)average cost methods.

The value of ending inventory using LIFO is ​

Inventory at the end of the year was inadvertently overstated.Which of the following statements correctly states the effect of the error on net income,assets,and stockholders' equity?