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Question;Question 1Which of the following methods is appropriate for a business whose inventory consists of a relatively small number of unique, high-cost items?AnswerFIFOLIFOaveragespecific identification2 pointsQuestion 2Which of the following measures the relationship between cost of merchandise sold and the amount of inventory carried during the period?Answerinventory turnovernumber of days? sales in inventoryretail method of inventory costinggross profit method of inventory costing2 pointsQuestion 3Which of the following is used to analyze the efficiency and effectiveness of inventory management?Answerinventory turnover onlynumber of days? sales in inventory onlyboth inventory turnover and number of days? sales in inventoryneither inventory turnover or number of days? sales in inventory2 pointsQuestion 4When merchandise sold is assumed to be in the order in which the purchases were made, the company is usingAnswerfirst-in, last-outlast-in, first-outfirst-in, first-outaverage cost2 pointsQuestion 5Use the following information to answer the following questions.The 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.DateProduct ZUnitsCostMay 3Purchase 5$30May 10Sale 3May 17Purchase 10$34May 20Sale 6May 23Sale 3May 30Purchase 10$40Assuming that the company uses the perpetual inventory system, determine the cost of merchandise sold for the sale of May 20 using the FIFO inventory cost method.Answer$250$180$196$2042 pointsQuestion 6Use the following information to answer the following questions.The 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.DateProduct ZUnitsCostMay 3Purchase 5$30May 10Sale 3May 17Purchase 10$34May 20Sale 6May 23Sale 3May 30Purchase 10$40Assuming that the company uses the perpetual inventory system, determine the ending inventory value for the month of May using the FIFO inventory cost method.Answer$494$502$422$5202 pointsQuestion 7Use the following information to answer the following questions.The 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.DateProduct ZUnitsCostMay 3Purchase 5$30May 10Sale 3May 17Purchase 10$34May 20Sale 6May 23Sale 3May 30Purchase 10$40Assuming that the company uses the perpetual inventory system, determine the gross profit for the sale of May 23 using the FIFO inventory cost method.Answer$78$90$102$1802 pointsQuestion 8Too much inventory on handAnswerreduces solvencyincreases the cost to safeguard the assetsincreases the losses due to price declinesall of the above2 pointsQuestion 9The inventory costing method that reports the most current prices in ending inventory isAnswerFIFOSpecific identificationLIFOAverage cost2 pointsQuestion 10The inventory costing method that reports the earliest costs in ending inventory isAnswerFIFOLIFOAverage costSpecific identification2 pointsQuestion 11Taking a physical count of inventoryAnsweris not necessary when a periodic inventory system is usedshould be dine near year-endhas no internal control relevanceis not necessary when a perpetual inventory system is used2 pointsQuestion 12Merchandise inventory at the end of the year was understated. Which of the following statements correctly states the effect of the error?Answernet income is understatednet income is overstatedcost of merchandise sold is understatedmerchandise inventory reported on the balance sheet is overstated2 pointsQuestion 13Kristin?s Boutiques has identified the following items for possible inclusion in its December 31, 2010 inventory. Which of the following would not be included in the year end inventory?AnswerMerchandise purchased FOB shipping point was picked up by the freight company but had still not arrived at Kristin?s Boutique as of December 31, 2010.Kristin has in its warehouse merchandise on consignment from Abby Co.Kristin has sent merchandise to various retailers on a consignment basis.Kristin has merchandise on hand which has been returned by customers because of wrong size.2 pointsQuestion 14If the cost of an item of inventory is $50 and the current replacement cost is $57, the amount included in inventory according to the lower of cost or market isAnswer$7$50$57$1072 pointsQuestion 15If merchandise inventory is being valued at cost and the purchase price is steadily falling, which method of costing will yield the largest net income?Answeraverage costLIFOFIFOweighted average2 pointsQuestion 16If merchandise inventory is being valued at cost and the price level is steadily rising, the method of costing that will yield the highest net income isAnswerperiodicLIFOFIFOaverage2 pointsQuestion 17Damaged merchandise that can be sold only at prices below cost should be valued atAnswernet realizable valueLIFOFIFOaverage2 pointsQuestion 18For the year ended December 31, 2011 Depot Max?s cost of merchandise sold was $54,350. Inventory at the beginning of the year was $6,540. Ending inventory was $7,250. Depot Max?s number of days sales in inventory is closest toAnswer43508472 pointsQuestion 19For the year ended December 31, 2011 Depot Max?s cost of merchandise sold was $54,350. Inventory at the beginning of the year was $6,540. Ending inventory was $7,250. Compute Depot Max?s inventory turnover for the year.Answer8.37.57.9472 pointsQuestion 20If a manufacturer ships merchandise to a retailer on consignment, the unsold merchandise should be included in the inventory of theAnswerconsigneeretailermanufacturershipper2 pointsQuestion 21The two most widely used methods for determining the cost of inventory areAnswerFIFO and LIFOFIFO and averageLIFO and averagegross profit and average2 pointsQuestion 22Under the _________ inventory method, accounting records maintain a continuously updated inventory value.Answerretailperiodicphysicalperpetual2 pointsQuestion 23During the taking of its physical inventory on December 31, 2010, Barry?s Bike Shop incorrectly counted its inventory as $270,000 instead of the correct amount of $190,000. The effect on the balance sheet and income statement would be as follows:Answerassets overstated by $80,000,retained earnings understated by $80,000, net income statement understated by $80,000.assets overstated by $80,000,retained earnings understated by $80,000, no effect on the income statement.assets and retained earnings overstated by $80,000, net income overstated by $80,000.assets and retained earnings overstated by $80,000, net income understated by $80,000.2 pointsQuestion 24The following lots of a particular commodity were available for sale during the year:Beginning inventory 5 units at $61First purchase 15 units at $63Second purchase 10 units at $74Third purchase 10 units at $77The 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 goods sold the year according to the LIFO method?Answer$1,380$1,375$1,510$1,2502 pointsQuestion 25Kristin?s Boutiques has identified the following items for possible inclusion in its December 31, 2010 inventory. Which of the following would not be included in the year end inventory?AnswerMerchandise purchased FOB shipping point was picked up by the freight company but had still not arrived at Kristin?s Boutique as of December 31, 2010.Kristin has in its warehouse merchandise on consignment from Abby Co.Kristin has sent merchandise to various retailers on a consignment basis.Kristin has merchandise on hand which has been returned by customers because of wrong size.

 

Paper#43284 | Written in 18-Jul-2015

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