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Exam 7: Inventories

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Question 41

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The weighted average inventory cost flow method is the least used of the inventory costing methods.

A) True
B) False

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Question 42

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Of the three widely used inventory costing methods (FIFO,LIFO,and average cost),the LIFO method of costing inventory assumes costs are charged based on the most recent purchases first.

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B) False

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Question 43

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

​ Match each description to the appropriate cost flow assumption (a-c) . -Produces the highest gross profit when costs are decreasing

A purchase order establishes an initial record of the receipt of the inventory.

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

Complete the chart,indicating whether LIFO or FIFO would give the highest and lowest amounts for each item,assuming a period of increasing costs.

​ Match each description to the appropriate cost flow assumption (a-c) . -Does not follow the physical flow of goods in most cases

Under the LIFO inventory costing method,the most recent costs are assigned to ending inventory.

Matching Match each description to the appropriate document used for inventory control (a-c) . -Last document in the chain,use to compare all three for accuracy

One negative effect of carrying too much inventory is risk that customers will change their buying habits.

If the estimated rate of gross profit is 30%,what is the estimated cost of the merchandise inventory on September 30,based on the following data?​

If a company mistakenly counts more items during a physical inventory than actually exist,how will the error affect its bottom line?

When using the FIFO inventory costing method,the most recent costs are assigned to the cost of merchandise sold.

Use of the retail inventory method requires taking a physical count of inventory.

Based on the following information compute (a)inventory turnover, (b)average daily cost of merchandise sold,and (c)days' sales in inventory for the current year.Use a 365-day year. (d)If an inventory turnover of 12 is average for the industry,how is this company doing?

Unsold consigned merchandise should be included in the consignee's inventory.

Based on the following data,estimate the cost of ending merchandise inventory using the gross profit method.

Use the information below to answer the following questions. Boxwood Company sells blankets for $60 each. The following was taken from the inventory records during May. The company had no beginning inventory on May 1. ​ ​ -Assuming that the company uses the perpetual inventory system,determine the ending inventory value for the month of May using the FIFO inventory cost method.

Inventory turnover measures the length of time it takes to acquire,sell,and replace the inventory.