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Chp.8

63 Questions  I  By Jlyons08
chp.8
   

  
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1.  Which of the following inventories carried by a manufacturer is similar to the merchandise inventory of a retailer?
A.
B.
C.
D.
2.  Where should raw materials be classified on the balance sheet?
A.
B.
C.
D.
3.  Which of the following accounts is not reported in inventory?
A.
B.
C.
D.
4.  Why are inventories included in the computation of net income?
A.
B.
C.
D.
5.  Which of the following is a characteristic of a perpetual inventory system?
A.
B.
C.
D.
6.  How is a significant amount of consignment inventory reported in the balance sheet?
A.
B.
C.
D.
7.  Where should goods in transit that were recently purchased f.o.b. destination be included on the balance sheet?
A.
B.
C.
D.
8.  Ifa company uses the periodic inventory system, what is the impact on net income of including goods in transit f.o.b. shipping point in purchases, but not ending inventory?
A.
B.
C.
D.
9.  Ifa company uses the periodic inventory system, what is the impact on the current ratio of including goods in transit f.o.b. shipping point in purchases, but not ending inventory?
A.
B.
C.
D.
10.  What is consigned inventory?
A.
B.
C.
D.
11.  When using a perpetual inventory system?
A.
B.
C.
D.
12.  Goods in transit which are shipped f.o.b. shipping point should be?
A.
B.
C.
D.
13.  Goods in transit which are shipped f.o.b. destination should be?
A.
B.
C.
D.
14.  Which of the following items should be included in a company's inventory at the balance sheet date?
A.
B.
C.
D.
15.  Use the following information for questions 35 and 36. During 2010 Carne Corporation transferred inventory to Nolan Corporation and agreed to repurchase the merchandise early in 2011. Nolan then used the inventory as collateral to borrow from Norwalk Bank, remitting the proceeds to Carne. In 2011 when Carne repurchased the inventory, Nolan used the proceeds to repay its bank loan. This transaction is known as a(n)?
A.
B.
C.
D.
16.  On whose books should the cost of the inventory appear at the December 31, 2010 balance sheet date?
A.
B.
C.
D.
17.  Goods on consignment are?
A.
B.
C.
D.
18.  Valuation of inventories requires the determination of all of the following except
A.
B.
C.
D.
19.  The accountant for the Pryor Sales Company is preparing the income statement for 2010 and the balance sheet at December 31, 2010. Pryor uses the periodic inventory system
A.
B.
C.
D.
20.  If the beginning inventory for 2010 is overstated, the effects of this error on cost of goods sold for 2010, net income for 2010, and assets at December 31, 2011, respectively, are
A.
B.
C.
D.
21.  The failure to record a purchase of merchandise on account even though the goods are properly included in the physical inventory results in
A.
B.
C.
D.
22.  Dolan Co. received merchandise on consignment. As of March 31, Dolan had recorded the transaction as a purchase and included the goods in inventory. The effect of this on its financial statements for March 31 would be
A.
B.
C.
D.
23.  Green Co. received merchandise on consignment. As of January 31, Green included the goods in inventory, but did not record the transaction. The effect of this on its financial statements for January 31 would be
A.
B.
C.
D.
24.  Feine Co. accepted delivery of merchandise which it purchased on account. As of December 31, Feine had recorded the transaction, but did not include the merchandise in its inventory. The effect of this on its financial statements for December 31 would be
A.
B.
C.
D.
25.  On June 15, 2010, Wynne Corporation accepted delivery of merchandise which it pur- chased on account. As of June 30, Wynne had not recorded the transaction or included the merchandise in its inventory. The effect of this on its balance sheet for June 30, 2010 would be
A.
B.
C.
D.
26.  What is the effect of a $50,000 overstatement of last year's inventory on current years ending retained earning balance?
A.
B.
C.
D.
27.  Which of the following is a product cost as it relates to inventory?
A.
B.
C.
D.
28.  Which of the following is a period cost?
A.
B.
C.
D.
29.  Which method may be used to record cash discounts a company receives for paying suppliers promptly?
A.
B.
C.
D.
30.  Which of the following is included in inventory costs?
A.
B.
C.
D.
31.  Which of the following is correct?
A.
B.
C.
D.
32.  All of the following costs should be charged against revenue in the period in which costs are incurred except for
A.
B.
C.
D.
33.  Which of the following types of interest cost incurred in connection with the purchase or manufacture of inventory should be capitalized as a product cost?
A.
B.
C.
D.
34.  The use of a Discounts Lost account implies that the recorded cost of a purchased inventory item is its
A.
B.
C.
D.
35.  The use of a Purchase Discounts account implies that the recorded cost of a purchased inventory item is its
A.
B.
C.
D.
36.  Use the following information for questions 56 and 57. During 2010, which was the first year of operations, Oswald Company had merchandise purchases of $985,000 before cash discounts. All purchases were made on terms of 2/10, n/30. Three-fourths of the items purchased were paid for within 10 days of purchase. All of the goods available had been sold at year end. Which of the following recording procedures would result in the highest cost of goods sold for 2010? 1. Recording purchases at gross amounts 2. Recording purchases at net amounts, with the amount of discounts not taken shown under "other expenses" in the income statement
A.
B.
C.
D.
37.  Which of the following recording procedures would result in the highest net income for 2010? 1. Recording purchases at gross amounts 2. Recording purchases at net amounts, with the amount of discounts not taken shown under "other expenses" in the income statement
A.
B.
C.
D.
38.  When using the periodic inventory system, which of the following generally would not be separately accounted for in the computation of cost of goods sold?
A.
B.
C.
D.
39.  Costs which are inventoriable include all of the following except
A.
B.
C.
D.
40.  Which inventory costing method most closely approximates current cost for each of the following: Ending Inventory                        Cost of Goods Sold
A.
B.
C.
D.
41.  In situations where there is a rapid turnover, an inventory method which produces a balance sheet valuation similar to the first-in, first-out method  is  
A.
B.
C.
D.
42.  The pricing of issues from inventory must be deferred until the end of the accounting period under the following method of inventory valuation:
A.
B.
C.
D.
43.  An inventory pricing procedure in which the oldest costs incurred rarely have an effect on the ending inventory valuation is
A.
B.
C.
D.
44.  Which method of inventory pricing best approximates specific identification of the actual flow of costs and units in most manufacturing situations?
A.
B.
C.
D.
45.  Assuming no beginning inventory, what can be said about the trend of inventory prices if cost of goods sold computed when inventory is valued using the FIFO method exceeds cost of goods sold when inventory is valued using the LIFO method?
A.
B.
C.
D.
46.  In a period of rising prices, the inventory method which tends to give the highest reported net income is
A.
B.
C.
D.
47.  In a period of rising prices, the inventory method which tends to give the highest reported inventory is
A.
B.
C.
D.
48.  Tanner Corporation's inventory cost on its balance sheet was lower using first-in, first-out than it would have been using last-in, first-out. Assuming no beginning inventory, in what direction did the cost of purchases move during the period?
A.
B.
C.
D.
49.  In a period of rising prices, the inventory method which tends to give the highest reported cost of goods sold is
A.
B.
C.
D.
50.  Which of the following statements is not valid as it applies to inventory costing methods?
A.
B.
C.
D.
51.  The acquisition cost of a certain raw material changes frequently. The book value of the inventory of this material at year end will be the same if perpetual records are kept as it would be under a periodic inventory method only if the book value is computed under the
A.
B.
C.
D.
52.  Which of the following is a reason why the specific identification method may be considered ideal for assigning costs to inventory and cost of goods sold?
A.
B.
C.
D.
53.  In a period of rising prices which inventory method generally provides the greatest amount of net income?
A.
B.
C.
D.
54.  In a period of falling prices, which inventory method generally provides the greatest In amount of net income?
A.
B.
C.
D.
55.  What is a LIFO reserve?
A.
B.
C.
D.
56.  When a company uses LIFO for external reporting purposes and FIFO for internal reporting purposes, an Allowance to Reduce Inventory to LIFO account is used. This account should be reported
A.
B.
C.
D.
57.  What happens when inventory in base year dollars decreases?
A.
B.
C.
D.
58.  How might a company obtain a price index in order to apply dollar-value LIFO?
A.
B.
C.
D.
59.  In the context of dollar-value LIFO, what is a LIFO layer? 
A.
B.
C.
D.
60.  Which of the following statements is not true as it relates to the dollar-value LIFO inven- tory method?
A.
B.
C.
D.
61.  Which of the following is not considered an advantage of LIFO when prices are rising?
A.
B.
C.
D.
62.  Which of the following is true regarding the use of LIFO for inventory valuation?
A.
B.
C.
D.
63.  If inventory levels are stable or increasing, an argument which is not an advantage of the LIFO method as compared to FIFO is
A.
B.
C.
D.
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