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Exam 6: Inventories

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Question 31

Multiple Choice

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A company just starting in business purchased three merchandise inventory items at the following prices. First purchase $64; Second purchase $76; Third purchase $68. If the company sold two units for a total of $200 and used FIFO costing, the gross profit for the period would be

A) $56.
B) $60.
C) $62.
D) $68.

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Question 32

Multiple Choice

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Switzer, Inc. has 8 computers which have been part of the inventory for over two years. Each computer cost $600 and originally retailed for $900. At the statement date, each computer has a current replacement cost of $400. What value should Switzer, Inc., have for the computers at the end of the year?

A) $2,400.
B) $3,200.
C) $4,800.
D) $7,200.

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Question 33

Multiple Choice

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Overstating ending inventory will overstate all of the following except

The retail inventory method requires a company to value its inventory on the balance sheet at retail prices.

The consistent application of an inventory costing method is essential for

The convergence issue that will be most difficult to resolve in the area of inventory accounting is:

An auto manufacturer would classify vehicles in various stages of production as

For companies that use a perpetual inventory system, all of the following are purposes for taking a physical inventory except

Eneri Company's inventory records show the following data: A physical inventory on December 31 shows 4,000 units on hand. Eneri sells the units for $13 each. The company has an effective tax rate of 20%. Eneri uses the periodic inventory method. Under the LIFO method, cost of goods sold is

The lower-of-cost-or-market (LCM) basis may be used with all of the following methods except

The specific identification method

Effie Company uses a periodic inventory system. Details for the inventory account for the month of January, 2015 are as follows: An end of the month (1/31/15) inventory showed that 160 units were on hand. If the company uses FIFO and sells the units for $10 each, what is the gross profit for the month?

The expense recognition principle requires that the cost of goods sold be matched against the ending merchandise inventory in order to determine income.

In a period of falling prices, the LIFO method results in a lower cost of goods sold than the FIFO method.

In a period of rising prices, the costs allocated to ending inventory may be understated in the

Under the gross profit method, each of the following items are estimated except for the

Partridge Bookstore had 500 units on hand at January 1, costing $9 each. Purchases and sales during the month of January were as follows: Partridge does not maintain perpetual inventory records. According to a physical count, 365 units were on hand at January 31. The cost of the inventory at January 31, under the FIFO method is:

A company just starting business made the following four inventory purchases in June: A physical count of merchandise inventory on June 30 reveals that there are 250 units on hand. The inventory method which results in the highest gross profit for June is

Effie Company uses a periodic inventory system. Details for the inventory account for the month of January, 2015 are as follows: An end of the month (1/31/15) inventory showed that 160 units were on hand. If the company uses FIFO, what is the value of the ending inventory?

The term "FOB" denotes