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Exam 7: Inventories

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Question 1

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Match each description to the appropriate cost flow assumption (a-d) . -Cost flow matches the unit sold to the unit purchased.

A) Weighted average
B) First-in, first-out (FIFO)
C) Last-in, first-out (LIFO)
D) Specific identification

E) All of the above
F) None of the above

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Question 2

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Beginning inventory,purchases,and sales data for hammers are as follows:​ Assuming the business maintains a perpetual inventory system,complete the inventory cards and calculate the cost of merchandise sold and ending inventory under the following assumptions: (a) First-in,first-out​ (b) Last-in,first-out

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a.First-in...

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Question 3

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On the basis of the following data,determine the value of the inventory at the lower of cost or market.Apply lower of cost or market to each inventory item.Show your work.

One of the two internal control procedures over inventory is to properly report inventory on the financial statements.

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

The primary objectives of control over inventory are

Match each situation to its impact (a-c) on the current year's net income. -Merchandise was purchased FOB destination on the last day of the year.The cost of the merchandise purchased was not included in ending inventory.

If merchandise inventory is being valued at cost and the purchase price is steadily falling,which method of costing will yield the largest net income?

​ Match each description to the appropriate cost flow assumption (a-c) . -Prohibited under International Financial Reporting Standards (IFRS)

During the taking of its physical inventory on December 31,Almond Supplies Company incorrectly counted its inventory as $545,000 instead of the correct amount of $554,000.Indicate the effects of the misstatement on Almond Supplies Company's balance sheet and income statement for the year ended December 31.

If Beginning Inventory (BI) + Purchases (P) - Ending Inventory (EI) = Cost of Merchandise Sold (COMS) ,an equivalent equation can be written as​

​ Match each description to the appropriate cost flow assumption (a-c) . -Cost of the latest purchases are assigned to ending inventory

Match each description to the appropriate inventory system (a or b) .​ -When using this system,a physical inventory is necessary to determine cost of merchandise sold.

Beginning inventory and purchases and sales data for T-shirts are as follows:​ Assuming the business maintains a periodic inventory system,calculate the cost of merchandise sold and ending inventory under the following assumptions: a. FIFO b. LIFO c. Average cost (round cost of merchandise sold and ending inventory to the nearest dollar)

Use the information below to answer the following questions. ​ The following lots of a particular commodity were available for sale during the year: ​ 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 cost of merchandise sold for the year according to the LIFO method?

A business using the retail method of inventory costing determines that merchandise inventory at retail is $2,300,000.If the ratio of cost to retail price is 55%,what is the amount of inventory to be reported on the financial statements?

The units of an item available for sale during the year were as follows:​ There are 30 units of the item in the physical inventory at December 31.The periodic inventory system is used.Determine the ending inventory cost using FIFO.

Kristin's Boutique has identified the following items for possible inclusion in its December 31 inventory.Which of the following would not be included in the year-end inventory?

During the taking of its physical inventory on December 31,Barry's Bike Shop incorrectly counted its inventory as $350,000 instead of the correct amount of $280,000.The effect on the balance sheet and income statement would be

"Market" as used in the phrase "lower of cost or market" for valuing inventory,refers to the price at which the inventory is being offered for sale by its owner.