1.Which of the following should not be included in the

physical inventory of a company?

(a) Goods held on consignment from another company.

(b) Goods shipped on consignment to another

company.

(c) Goods in transit from another company shipped FOB

shipping point.

(d) All of the above should be included.

2. As a result of a thorough physical inventory, Railway

Company determined that it had inventory worth

180,000 at December 31, 2014. This count did not

take into consideration the following facts. Rogers

Consignment store currently has goods worth

35,000 on its sales fl oor that belong to Railway but

are being sold on consignment by Rogers. The selling

price of these goods is 50,000. Railway purchased

13,000 of goods that were shipped on December 27,

FOB destination, that will be received by Railway on

January 3. Determine the correct amount of inventory that Railway should report.

(a) 230,000. (c) 228,000.

(b) 215,000. (d) 193,000.

3. Cost of goods available for sale consists of two

elements: beginning inventory and:

(a) ending inventory.

(b) cost of goods purchased.

(c) cost of goods sold.

(d) All of the above.

4. Tinker Bell Company has the following:

Units Unit Cost

Inventory, Jan. 1 8,000 $11

Purchase, June 19 13,000 12

Purchase, Nov. 8 5,000 13

If Tinker Bell has 9,000 units on hand at December

31, the cost of the ending inventory under FIFO is:

(a) $99,000. (c) $113,000.

(b) $108,000. (d) $117,000.

6. In periods of rising prices, average-cost will produce:

(a) higher net income than FIFO.

(b) the same net income as FIFO.

(c) lower net income than FIFO.

(d) net income equal to the specifi c identifi cation

method.

8. Rickety Company purchased 1,000 widgets and has

200 widgets in its ending inventory at a cost of HK$91

each and a net realizable value of HK$80 each. The

ending inventory under LCNRV is:

(a) HK$91,000. (c) HK$18,200.

(b) HK$80,000. (d) HK$16,000.