Multiple Choice 6 PDF

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Test tema 6 de financial accounting del grupo de ADE en inglés A6-B6...

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1.

The factor which determines whether or not goods should be included in a physical count of inventory is a. b. c. d.

2.

If goods in transit are shipped FOB destination a. b. c. d.

3.

physical possession. legal title. management's judgment. whether or not the purchase price has been paid.

the seller has legal title to the goods until they are delivered. the buyer has legal title to the goods until they are delivered. the transportation company has legal title to the goods while the goods are in transit. no one has legal title to the goods until they are delivered.

After the physical inventory is completed, a. quantities are listed on inventory summary sheets. b. quantities are entered into various general ledger inventory accounts. c. the accuracy of the inventory summary sheets is checked by the person listing the quantities on the sheets. d. unit costs are determined by dividing the quantities on the summary sheets by the total inventory costs.

4.

When is a physical inventory usually taken? a. b. c. d.

5.

When goods are not being sold or received. When the company has its greatest amount of inventory. At the end of the company’s fiscal year. Both (b) and (c).

Which of the following should not be included in the physical inventory of a company? a. b. c. d.

Goods held on consignment from another company. Goods in transit from another company shipped FOB shipping point. Goods shipped on consignment to another company. All of the above should be included.

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6.

Goods held on consignment are a. b. c. d.

7.

When a perpetual inventory system is used, which of the following is a purpose of taking a physical inventory? a. b. c. d.

8.

never owned by the consignee. included in the consignee’s ending inventory. kept for sale on the premises of the consignor. included as part of no one’s ending inventory.

To check the accuracy of the perpetual inventory records To determine cost of goods sold for the accounting period To compute inventory ratios All are a purpose of taking a physical inventory when a perpetual inventory system is used.

Which statement is false? a. Taking a physical inventory involves actually counting, weighing, or measuring each kind of inventory on hand. b. No matter whether a periodic or perpetual inventory system is used, all companies need to determine inventory quantities at the end of each accounting period. c. An inventory count is generally more accurate when goods are not being sold or received during the counting. d. Companies that use a perpetual inventory system must take a physical inventory to determine inventory on hand on the balance sheet date and to determine cost of goods sold for the accounting period.

9.

Reeves Company is taking a physical inventory on March 31, the last day of its fiscal year. Which of the following must be included in this inventory count? a. b. c. d.

Goods in transit to Reeves, FOB destination Goods that Reeves is holding on consignment for Parker Company Goods in transit that Reeves has sold to Smith Company, FOB shipping point Goods that Reeves is holding in inventory on March 31 for which the related Accounts Payable is 15 days past due

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10.

At December 31, 2012 Mohling Company’s inventory records indicated a balance of $652,000. Upon further investigation it was determined that this amount included the following: $112,000 in inventory purchases made by Mohling shipped from the seller 12/27/12 terms FOB destination, but not due to be received until January 2nd th $74,000 in goods sold by Mohling with terms FOB destination on December 27 . The th goods are not expected to reach their destination until January 6 . $6,000 of goods received on consignment from Dollywood Company What is Mohling’s correct ending inventory balance at December 31, 2012? a. b. c. d.

11.

$540,000 $646,000 $460,000 $534,000

At December 31, 2012 Howell Company’s inventory records indicated a balance of $928,000. Upon further investigation it was determined that this amount included the following: $168,000 in inventory purchases made by Howell shipped from the seller 12/27/12 terms FOB destination, but not due to be received until January 2nd th $111,000 in goods sold by Howell with terms FOB destination on December 27 . The th goods are not expected to reach their destination until January 6 . $9,000 of goods received on consignment from Westwood Company What is Howell’s correct ending inventory balance at December 31, 2012? a. b. c. d.

12.

$760,000 $919,000 $640,000 $751,000

For companies that use a perpetual inventory system, all of the following are purposes for taking a physical inventory except to: a. b. c. d.

check the accuracy of the records. determine the amount of wasted raw materials. determine losses due to employee theft. determine ownership of the goods.

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13.

Inventory costing methods place primary reliance on assumptions about the flow of a. b. c. d.

14.

goods. costs. resale prices. values.

Alpha First Company just began business and made the following four inventory purchases in June: June 1 June 10 June 15 June 28

150 units 200 units 200 units 150 units

$ 780 1,170 1,260 990 $4,200

A physical count of merchandise inventory on June 30 reveals that there are 250 units on hand. Using the LIFO inventory method, the value of the ending inventory on June 30 is a. b. c. d. 15.

$1,300 $1,365 $1,650 $1,620

Baker Bakery Company just began business and made the following four inventory purchases in June: June 1 June 10 June 15 June 28

150 units 200 units 200 units 150 units

$ 780 1,170 1,260 990 $4,200

A physical count of merchandise inventory on June 30 reveals that there are 250 units on hand. Using the FIFO inventory method, the amount allocated to ending inventory for June is a. b. c. d.

$1,300 $1,365 $1,620 $1,650

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16.

Charlene Cosmetics Company just began business and made the following four inventory purchases in June: June 1 June 10 June 15 June 28

150 units 200 units 200 units 150 units

$ 780 1,170 1,260 990 $4,200

A physical count of merchandise inventory on June 30 reveals that there are 250 units on hand. Using the average cost method, the amount allocated to the ending inventory on June 30 is a. b. c. d. 17.

$1,463. $1,620. $1,575. $1,500.

Echo Sound Company just began business and made the following four inventory purchases in June: June 1 June 10 June 15 June 28

150 units 200 units 200 units 150 units

$ 780 1,170 1,260 990 $4,200

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 a. b. c. d.

the FIFO method. the LIFO method. the weighted average unit cost method. not determinable.

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18.

Atom Company just began business and made the following four inventory purchases in June: June 1 June 10 June 15 June 28

150 units 200 units 200 units 150 units

$ 825 1,120 1,140 885 $3,970

A physical count of merchandise inventory on June 30 reveals that there are 250 units on hand. Using the LIFO inventory method, the value of the ending inventory on June 30 is a. b. c. d. 19.

$1,385. $1,425. $1,455. $1,475.

Quark Inc. just began business and made the following four inventory purchases in June: June 1 June 10 June 15 June 28

150 units 200 units 200 units 150 units

$ 825 1,120 1,140 885 $3,970

A physical count of merchandise inventory on June 30 reveals that there are 250 units on hand. Using the FIFO inventory method, the amount allocated to ending inventory for June is a. b. c. d.

$1,385. $1,425. $1,455. $1,475.

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20.

A company just began business and made the following four inventory purchases in June: June 1 June 10 June 15 June 28

150 units 200 units 200 units 150 units

$ 825 1,120 1,140 885 $3,970

A physical count of merchandise inventory on June 30 reveals that there are 250 units on hand. Using the average cost method, the amount allocated to the ending inventory on June 30 is a. b. c. d. 21.

$1,418. $1,475. $1,425. $1,400.

Noise Makers Inc has the following inventory data: July 1 7 22

Beginning inventory Purchases Purchases

20 units at $19 70 units at $20 10 units at $22

$ 380 1,400 220 $2,000

A physical count of merchandise inventory on July 30 reveals that there are 40 units on hand. Using the average cost method, the value of ending inventory is a. b. c. d. 22.

$780. $800. $813. $820.

Olympus Climbers Company has the following inventory data: July 1 7 22

$ 380 1,400 220 $2,000 A physical count of merchandise inventory on July 30 reveals that there are 40 units on hand. Using the FIFO inventory method, the amount allocated to cost of goods sold for July is a. b. c. d.

Beginning inventory Purchases Purchases

20 units at $19 70 units at $20 10 units at $22

$780. $820. $1,180. $1,220.

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23.

Pop-up Party Favors Inc has the following inventory data: July 1 7 22

Beginning inventory Purchases Purchases

20 units at $19 70 units at $20 10 units at $22

$ 380 1,400 220 $2,000

A physical count of merchandise inventory on July 30 reveals that there are 40 units on hand. Using the FIFO inventory method, the amount allocated to ending inventory for July is a. b. c. d. 24.

$780. $820. $800. $760.

Quiet Phones Company has the following inventory data: July 1 7 22

Beginning inventory Purchases Purchases

20 units at $19 70 units at $20 10 units at $22

$ 380 1,400 220 $2,000

A physical count of merchandise inventory on July 30 reveals that there are 40 units on hand. Using the LIFO inventory method, the amount allocated to cost of goods sold for July is a. b. c. d. 25.

$780. $820. $1,180. $1,220.

Radical Radials Company has the following inventory data: July 1 7 22

Beginning inventory Purchases Purchases

20 units at $19 70 units at $20 10 units at $22

$ 380 1,400 220 $2,000

A physical count of merchandise inventory on July 30 reveals that there are 40 units on hand. Using the LIFO inventory method, the amount allocated to ending inventory for July is a. b. c. d.

$780 $813 $800 $760.

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26.

Orange-Aide Company has the following inventory data: July 1 7 22

Beginning inventory Purchases Purchases

20 units at $20 70 units at $21 10 units at $22

$ 400 1,470 220 $2,090

A physical count of merchandise inventory on July 30 reveals that there are 30 units on hand. Using the average cost method, the value of ending inventory is a. b. c d 27.

$600 $627 $630 $660

Peach Pink Inc. has the following inventory data: July 1 7 22

Beginning inventory Purchases Purchases

20 units at $20 70 units at $21 10 units at $22

$ 400 1,470 220 $2,090

A physical count of merchandise inventory on July 30 reveals that there are 30 units on hand. Using the FIFO inventory method, the amount allocated to cost of goods sold for July is a. b. c. d. 28.

$1,450 $1,480 $1,490. $1,470.

Grape Gratuities Company has the following inventory data: July 1 7 22

Beginning inventory Purchases Purchases

20 units at $20 70 units at $21 10 units at $22

$ 400 1,470 220 $2,090

A physical count of merchandise inventory on July 30 reveals that there are 30 units on hand. Using the FIFO inventory method, the amount allocated to ending inventory for July is a. $600. b. $610. c. $640. d. $660.

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29.

Apple-A-Day Company has the following inventory data: July 1 7 22

Beginning inventory Purchases Purchases

20 units at $20 70 units at $21 10 units at $22

$ 400 1,470 220 $2,090

A physical count of merchandise inventory on July 30 reveals that there are 30 units on hand. Using the LIFO inventory method, the amount allocated to cost of goods sold for July is a. b. c. d. 30.

$1,480 $1,470 $1,450. $1,430.

Bonkers Bananas has the following inventory data: July 1 7 22

Beginning inventory Purchases Purchases

20 units at $20 70 units at $21 10 units at $22

$ 400 1,470 220 $2,090

A physical count of merchandise inventory on July 30 reveals that there are 30 units on hand. Using the LIFO inventory method, the amount allocated to ending inventory for July is a. b. c. d. 31.

Inventory costing methods place primary reliance on assumptions about the flow of a. b. c. d.

32.

$660 $610 $600 $630.

good. costs. resale prices. values.

Which of the following terms best describes the assumption made in applying the four inventory methods? a. b. c. d.

Goods flow. Cost flow. Asset flow. Physical flow.

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33.

An assumption about cost flow is necessary a. b. c. d.

34.

because it is required by the income tax regulation. even when there is no change in the purchase price on inventory. only when the flow of goods cannot be determined. because prices usually change, and tracking which units have been sold is difficult.

Piper Pipes has the following inventory data: July 1 5 14 21 30

Beginning inventory Purchases Sale Purchases Sale

20 units at $120 120 units at $112 80 units 60 units at $115 56 units

Assuming that a periodic inventory system is used, what is the cost of goods sold on a LIFO basis. a. b. c. d. 35.

$7,328 $7,348 $15,392 $15,412

Trumpeting Trumpets has the following inventory data: July 1 5 14 21 30

Beginning inventory Purchases Sale Purchases Sale

20 units at $120 120 units at $112 80 units 60 units at $115 56 units

Assuming that a periodic inventory system is used, what is the cost of goods sold on a FIFO basis. a. b. c. d.

$7,328 $7,348 $15,392 $15,412

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36.

Sassy Saxophones has the following inventory data: July 1 5 14 21 30

Beginning inventory Purchases Sale Purchases Sale

20 units at $120 120 units at $112 80 units 60 units at $115 56 units

Assuming that a periodic inventory system is used, what is the amount allocated to ending inventory on a LIFO basis. a. b. c. d. 37.

$7,328 $7,348 $15,392. $15,412

Clear Clarinets has the following inventory data: July 1 5 14 21 30

Beginning inventory Purchases Sale Purchases Sale

20 units at $120 120 units at $112 80 units 60 units at $115 56 units

Assuming that a periodic inventory system is used, what is the amount allocated to ending inventory on a FIFO basis. a. b. c. d. 38.

$7,288 $7,348 $15,392. $15,412

Which of the following is not a common cost flow assumption used in costing inventory? a. b. c. d.

First-in, first-out Middle-in, first-out Last-in, first-out Average cost

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39.

Which of the following statements is true regarding inventory cost flow assumptions? a. b. c. d.

40.

A company may use more than one costing method concurrently. A company must comply with the method specified by industry standards. A company must use the same method for domestic and foreign operations. A company may never change its inventory costing method once it has chosen a method.

Which of the following statements is correct with respect to inventories? a. The FIFO method assumes that the costs of the earliest goods acquired are the last to be sold. b. It is generally good business management to sell the most recently acquired goods first. c. Under FIFO, the ending inventory is based on the latest units purchased. d. FIFO seldom coincides with the actual physical flow of inventory.

41.

Given equal circumstances, which inventory method would probably be the most time consuming? a. b. c. d.

42.

FIFO LIFO Average cost Specific identification.

Serene Stereos has the following inventory data: Nov. 1 8 17 25

Inventory Purchase Purchase Purchase

30 units @ $8.00 each 120 units @ $8.60 each 60 units @ $8.40 each 90 units @ $8.80 each

A physical count of merchandise inventory on November 30 reveals that there are 100 units on hand. Cost of goods sold under FIFO is a. b. c. d.

$876 $1,692 $842 $1,726

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43.

Carryable CDs has the following inventory data: Nov. 1 8 17 25

Inventory Purchase Purchase Purchase

30 units @ $8.00 each 120 units @ $8.60 each 60 units @ $8.40 each 90 units @ $8.80 each

A physical count of merchandise inventory on November 30 reveals that there are 100 units on hand. Cost of goods sold under LIFO is a. b. c. d. 44.

$876 $1,692 $842 $1,726

Laser Listening has the following inventory data: Nov. 1 8 17 25

Inventory Purchase Purchase Purchase

30 units @ $8.00 each 120 units @ $8.60 each 60 units @ $8.40 each 90 units @ $8.80 each

A physical count of merchandise inventory on November 30 reveals that there are 100 units on hand. Assuming that the specific identification method is used and that ending inventory consists of 30 units from each of the three purchases and 10 units from the November 1 inventory, cost of goods sold is a. b. c. d. 45.

$854. $1,714. $1,708. $1,672.

In periods of rising prices, which is an advantage of using the LIFO inventory costing method? a. Ending inventory will include latest (most recent) costs and thus be more realistic. b. Cost of goods sold will include latest (most recent) costs and thus will be more realistic. c. Net income will be the highest and thus reflect the prosperity of the company. d. Phantom profits are reported.

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46.

Hogan Industries had the following inventory transactions occur during 2012: Feb. 1, 2012 Mar. 14, 2012 May 1, 2012

Purchase Purchase Purchase

Units 18 31 22

Cost/unit $45 $47 $49

The company sold 51 units at $63 each and has a tax rate of 30%. Assuming that a periodic inventory system is used, what is the company’s gross profit using LIFO? (rounded to whole dollars) a. b. c. d. 47.

$2,441 $2,365 $848 $772

Hogan Industries had the following inventory transactions occur during 2012: Feb. 1, 2012 Mar. 14, 2012 May 1, 2012

Purchase Purchase Purchase

Units 18 31 22

Cost/unit $45 $47 $49

The company sold 51 units at $63 each and has a tax rate of 30%. Assuming that a periodic inventory system is used, and operating expenses of $300, what is the company’s after-tax income using LIFO? (rounded to whole dollars) a. b. c. d. 48.

$472 $548 $384 $330

Hogan Industries had the following inventory tra...