FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 5: Inventories and Cost of Sales

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 31

True/False

Review LaterAdd Note

Review Later

The matching principle requires that the inventory valuation method follow the physical flow of inventory.

A) True
B) False

Correct Answer

verified

Show Answer

Question 32

Essay

Review LaterAdd Note

Review Later

Identify the items that are included in merchandise inventory. (In your answer address the special situations of goods in transit, consigned goods and damaged goods.)

Correct Answer

verified

Merchandise inventory consists of goods ...

View Answer

Show Answer

Question 33

Multiple Choice

Review LaterAdd Note

Given the following information, determine the cost of goods sold at December 31 using the LIFO periodic inventory method. December 2: 5 units were purchased at $7 per unit. December 9: 10 units were purchased at $9.40 per unit. December 11: 12 units were sold at $35 per unit December 15: 20 units were purchased at $10.15 per unit December 22: 18 units were sold at $35 per unit

An advantage of the weighted-average inventory method is that it tends to smooth out the effects of price changes.

During January, a company that uses a perpetual inventory system had beginning inventory, purchases and sales as follows. What was the FIFO cost of the company's January 31 inventory?

The cost of an inventory item includes its invoice cost and any added or incidental costs necessary to make it saleable less any discount.

Toys "R" Us had cost of goods sold of $9,421 million, ending inventory of $2,089 million and average inventory of $1,965 million. The inventory turnover equals:

In the retail inventory method of inventory valuation, the retail amount of inventory refers to the dollar amount measured by looking at the selling prices of inventory items.

Given the following information, determine the cost of goods sold for December 31 using the FIFO periodic inventory method. December 2: 5 units were purchased at $7 per unit. December 9: 10 units were purchased at $9.40 per unit. December 11: 12 units were sold at $35 per unit December 15: 20 units were purchased at $10.15 per unit December 22: 18 units were sold at $35 per unit

The consistency principle:

A company's cost of goods sold was $15,500 and its average merchandise inventory was $4,500. Its inventory turnover equals 3.4.

Toys "R" Us had cost of goods sold of $8,321 million and its ending inventory was $2,027 million. Based on this, its days' sales in inventory is equal to 89 days.

One of the most important decisions in accounting for inventory is determining the unit costs assigned to each inventory item.

The cost of an inventory item includes the _____________, plus ______________ costs necessary to put it in a place and condition for sale.

According to IRS requirements, companies are allowed to use FIFO for financial reporting and LIFO for tax reporting.

A major goal in accounting for inventory is ______________ costs against sales.

A company reported the following data related to its ending inventory: Calculate the lower-of-cost-or-market on the: (a) Inventory as a whole and (b) inventory applied separately to each product.

Toys "R" Us had cost of goods sold of $9,421 million, ending inventory of $2,089 million and average inventory of $1,965 million. Its days' sales in inventory equals:

When LIFO is used with the periodic inventory system, cost of goods sold is assigned costs from the most recent purchases at the point of each sale, rather than from the most recent purchases for the period.

Identify the inventory valuation method that is being described for each situation below. In all cases, assume a period of rising prices. Use the following to identify the inventory valuation method: $\begin{array} { | l | l | } \hline \text { FIFO } & \text { First in, first out } \\\hline \text { LIFO } & \text { Last in, first out } \\\hline \text { SI } & \text { Specific identification } \\\hline \text { WA } & \text { Weighted average } \\\hline\end{array}$ a. The method that can only be used if each inventory item can be matched with a specific purchase and its invoice b. The method that will cause the company to have the lowest income taxes c. The method that will cause the company to have the lowest cost of goods sold d. The method that will assign a value to inventory that approximates its current cost e. The method that will tend to smooth out erratic changes in costs.