Question 1

The only acceptable cost flow assumptions under IFRS are

Accepted Answer

A)  FIFO and LIFO.
B)  FIFO and average.
C)  LIFO and average.
D)  FIFO, LIFO and average.E) A) and D)
F) A) and C)

Question 2

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. How many units did the company sell during January, 2015?

Accepted Answer

A)  60
B)  160
C)  200
D)  240E) A) and B)
F) B) and C) D

Question 3

Two companies report the same cost of goods available for sale but each employs a different inventory costing method. If the price of goods has increased during the period, then the company using

Accepted Answer

A)  LIFO will have the highest ending inventory.
B)  FIFO will have the highest cost of good sold.
C)  FIFO will have the highest ending inventory.
D)  LIFO will have the lowest cost of goods sold.E) None of the above
F) B) and C)

Question 4

Inventory items on an assembly line in various stages of production are classified as

Accepted Answer

A)  Finished goods.
B)  Work in process.
C)  Raw materials.
D)  Merchandise inventory.E) A) and D)
F) B) and C)

Question 5

Under a consignment arrangement, the

Accepted Answer

A)  consignor has ownership until goods are sold to a customer.
B)  consignor has ownership until goods are shipped to the consignee.
C)  consignee has ownership when the goods are in the consignee's possession.
D)  consigned goods are included in the inventory of the consignee.E) A) and D)
F) C) and D) A

Question 6

Under the FIFO method, the costs of the earliest units purchased are the first charged to cost of goods sold.

Accepted Answer

A) True 
 B)False

Question 7

Use of the LIFO inventory valuation method enables a company to report paper or phantom profits.

Accepted Answer

A) True 
 B)False

Question 8

Sawyer Company uses the perpetual inventory system and the moving-average method to value inventories. On August 1, there were 10,000 units valued at $30,000 in the beginning inventory. On August 10, 20,000 units were purchased for $6 per unit. On August 15, 24,000 units were sold for $12 per unit. The amount charged to cost of goods sold on August 15 was

Accepted Answer

A)  $30,000.
B)  $108,000.
C)  $120,000.
D)  $144,000.E) None of the above
F) A) and B)

Question 9

If a company uses the FIFO cost flow assumption, the cost of goods sold for the period will be the same under a perpetual or periodic inventory system.

Accepted Answer

A) True 
 B)False

Question 10

The specific identification method of inventory costing

Accepted Answer

A)  always maximizes a company's net income.
B)  always minimizes a company's net income.
C)  has no effect on a company's net income.
D)  may enable management to manipulate net income.E) B) and D)
F) None of the above

Question 11

Management may choose any inventory costing method it desires as long as the cost flow assumption chosen is consistent with the physical movement of goods in the company.

Accepted Answer

A) True 
 B)False

Question 12

Under the lower-of-cost-or-market basis in valuing inventory, market is defined as

Accepted Answer

A)  current replacement cost.
B)  selling price.
C)  historical cost plus 10%.
D)  selling price less markup.E) A) and B)
F) A) and C)

Question 13

Days in inventory is calculated by dividing

Accepted Answer

A)  the inventory turnover by 365 days.
B)  average inventory by 365 days.
C)  365 days by the inventory turnover.
D)  365 days by average inventory.E) C) and D)
F) B) and C)

Question 14

Beginning inventory plus the cost of goods purchased equals

Accepted Answer

A)  cost of goods sold.
B)  cost of goods available for sale.
C)  net purchases.
D)  total goods purchased.E) C) and D)
F) None of the above

Question 15

Inventoriable costs include all of the following except the

Accepted Answer

A)  freight costs incurred when buying inventory.
B)  costs of the purchasing and warehousing departments.
C)  cost of the beginning inventory.
D)  cost of goods purchased.E) None of the above
F) B) and C) B

Question 16

The cost of goods available for sale consists of the beginning inventory plus the cost of goods purchased.

Accepted Answer

A) True 
 B)False

Question 17

Companies adopt different cost flow methods for each of the following reasons except

Accepted Answer

A)  balance sheet effects.
B)  cost effects.
C)  income statements effects.
D)  tax effects.E) All of the above
F) A) and B)

Question 18

Inventories are reported in the current assets section of the balance sheet immediately below receivables.

Accepted Answer

A) True 
 B)False

Question 19

The accounting principle that requires that the cost flow assumption be consistent with the physical movement of goods is

Accepted Answer

A)  called the expense recognition principle.
B)  called the consistency principle.
C)  nonexistent; that is, there is no accounting requirement.
D)  called the physical flow assumption.E) C) and D)
F) B) and D)

Question 20

An error that overstates the ending inventory will also cause net income for the period to be overstated.

Accepted Answer

A) True 
 B)False

Exam 6: Inventories

The only acceptable cost flow assumptions under IFRS are

Correct Answer
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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. How many units did the company sell during January, 2015?

Correct Answer
verified
D

Two companies report the same cost of goods available for sale but each employs a different inventory costing method. If the price of goods has increased during the period, then the company using

Correct Answer
verified

Inventory items on an assembly line in various stages of production are classified as

Correct Answer
verified

Under a consignment arrangement, the

Correct Answer
verified
A

Under the FIFO method, the costs of the earliest units purchased are the first charged to cost of goods sold.

Correct Answer
verified

Use of the LIFO inventory valuation method enables a company to report paper or phantom profits.

Correct Answer
verified

Correct Answer
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If a company uses the FIFO cost flow assumption, the cost of goods sold for the period will be the same under a perpetual or periodic inventory system.

Correct Answer
verified

The specific identification method of inventory costing

Correct Answer
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Management may choose any inventory costing method it desires as long as the cost flow assumption chosen is consistent with the physical movement of goods in the company.

Correct Answer
verified

Under the lower-of-cost-or-market basis in valuing inventory, market is defined as

Correct Answer
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Days in inventory is calculated by dividing

Correct Answer
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Beginning inventory plus the cost of goods purchased equals

Correct Answer
verified

Inventoriable costs include all of the following except the

Correct Answer
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B

The cost of goods available for sale consists of the beginning inventory plus the cost of goods purchased.

Correct Answer
verified

Companies adopt different cost flow methods for each of the following reasons except

Correct Answer
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Inventories are reported in the current assets section of the balance sheet immediately below receivables.

Correct Answer
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The accounting principle that requires that the cost flow assumption be consistent with the physical movement of goods is

Correct Answer
verified

An error that overstates the ending inventory will also cause net income for the period to be overstated.

Correct Answer
verified

Exam 6: Inventories

The only acceptable cost flow assumptions under IFRS are

Correct AnswerverifiedShow Answer

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. How many units did the company sell during January, 2015?

Correct AnswerverifiedD

Two companies report the same cost of goods available for sale but each employs a different inventory costing method. If the price of goods has increased during the period, then the company using

Correct AnswerverifiedShow Answer

Inventory items on an assembly line in various stages of production are classified as

Correct AnswerverifiedShow Answer

Under a consignment arrangement, the

Correct AnswerverifiedA

Under the FIFO method, the costs of the earliest units purchased are the first charged to cost of goods sold.

Correct AnswerverifiedShow Answer

Use of the LIFO inventory valuation method enables a company to report paper or phantom profits.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If a company uses the FIFO cost flow assumption, the cost of goods sold for the period will be the same under a perpetual or periodic inventory system.

Correct AnswerverifiedShow Answer

The specific identification method of inventory costing

Correct AnswerverifiedShow Answer

Management may choose any inventory costing method it desires as long as the cost flow assumption chosen is consistent with the physical movement of goods in the company.

Correct AnswerverifiedShow Answer

Under the lower-of-cost-or-market basis in valuing inventory, market is defined as

Correct AnswerverifiedShow Answer

Days in inventory is calculated by dividing

Correct AnswerverifiedShow Answer

Beginning inventory plus the cost of goods purchased equals

Correct AnswerverifiedShow Answer

Inventoriable costs include all of the following except the

Correct AnswerverifiedB

The cost of goods available for sale consists of the beginning inventory plus the cost of goods purchased.

Correct AnswerverifiedShow Answer

Companies adopt different cost flow methods for each of the following reasons except

Correct AnswerverifiedShow Answer

Inventories are reported in the current assets section of the balance sheet immediately below receivables.

Correct AnswerverifiedShow Answer

The accounting principle that requires that the cost flow assumption be consistent with the physical movement of goods is

Correct AnswerverifiedShow Answer

An error that overstates the ending inventory will also cause net income for the period to be overstated.

Correct AnswerverifiedShow Answer

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D

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A

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B

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