Regarding consigned inventory,

a.the retailer is the consignor.

b.the manufacturer is the consignor.

c.the unsold merchandise is part of the consignee's records at year-end.

d.the consignee retains the title to the inventory.

A company purchased inventory on November 1, November 12, November 22, and November 30. The unit cost from which of these purchases would likely be used to compute the ending inventory for November under LIFO, assuming a periodic inventory system and that not all the units owned were sold?

a.November 12

b.November 1

c.November 30

d.November 22

Gordon Company uses the retail method of inventory costing. The retail value of ending inventory is $331,000. If the ratio of cost to retail price is 70%, what amount of ending inventory is reported on the financial statements?

a.$99,300

b.$231,700

c.$331,000

d.Not enough information is provided to answer this question

Inventory is added to the inventory records after all of the following are reconciled, EXCEPT the

a.vendor's invoice.

b.purchase order.

c.sales invoice.

d.receiving report.

During the taking of its physical inventory, a company inadvertently counted its inventory as $89,600 instead of the correct amount of $86,800. Indicate the effect of the misstatement on the balance sheet of the current year.

a.Owner's equity is understated by $2,800.

b.Assets are understated by $2,800.

c.Owner's equity is overstated by $2,800.

d.Liabilities are overstated by $2,800.

When the weighted average cost method is used for the perpetual inventory system, a weighted average unit cost for each item is determined

a.at the beginning of the time period.

b.each time a purchase is made.

c.at the end of the time period.

d.None of these choices are correct.

Which of the following statements regarding the perpetual LIFO inventory method is true?

a.Unit costs for each item are averaged each time a purchase is made.

b.The cost of the units sold is the cost of the most recent purchases.

c.Costs are included in the cost of merchandise sold in the order in which units were purchased.

d.All of these choices are correct.

The lower-of-cost-or-market method can be applied to

a.total inventory as a whole.

b.each major class or category of inventory.

c.each item in the inventory.

d.All of these choices are correct.

Determine the cost of merchandise sold for the transaction on October 8 using the perpetual inventory system and the LIFO method.

DateItemUnitsCostTotalOct. 1Inventory5$11$554Purchase812968Sale720Purchase151522525Sale12

a.$84

b.$225

c.$73

d.$96

Average inventory is computed as

a.[Inventory (at beginning of period) - Inventory (at end of period)] 365 days.

b.[Inventory (at beginning of period) + Inventory (at end of period)] 365 days.

c.[Inventory (at beginning of period) - Inventory (at end of period)] 2.

d.[Inventory (at beginning of period) + Inventory (at end of period)] 2.

Which cost flow method is used most frequently?

a.FIFO

b.LIFO

c.Specific identification

d.Weighted average

The following three identical units of item ABC are purchased during July:

Item ABCUnitsCostJuly 9Purchase1$3116Purchase14427Purchase157Total3$132Average cost per unit$44($132 3 units)

Assume that one unit is sold on July 30 for $66. Determine the gross profit for July and ending inventory on July 31 using the weighted average cost method.

a.Gross profit = $35; ending inventory = $88

b.Gross profit = $9; ending inventory = $75

c.Gross profit = $35; ending inventory = $101

d.Gross profit = $22; ending inventory = $88

When a periodic inventory system is used,

a.only the reduction of inventory is recorded each time a sale is made.

b.only the cost of merchandise sold is recorded each time a sale is made.

c.only revenue is recorded each time a sale is made.

d.None of these choices are correct.

Cost flow assumptions follow the physical flow of goods for which of the following?

a.FIFO

b.LIFO

c.Specific identification

d.Weighted average

Inventory turnover is computed as

a.Cost of Merchandise Sold Average Inventory.

b.Average Inventory Average Daily Cost of Merchandise Sold.

c.Average Inventory Sales.

d.Sales Cost of Merchandise Sold

An advantage of using the retail method of inventory costing is

a.that it allows management to monitor operations more closely when the number of physical inventories is reduced.

b.that it may be used as an aid in taking a physical inventory.

c.that it provides inventory figures for preparing monthly and quarterly financial statements when the periodic system is used.

d.All of these choices are correct

The following financial statement data at December 31 are for Ecco Company:

Cost of merchandise sold$557,500Inventories:Beginning of year208,000End of year146,000

Determine the days' sales in inventory for the year.(Round to the nearest dollar and to one decimal place for days.)

a.40.6 days

b.95.6 days

c.136.2 days

d.115.9 days

Morgan Industries is comparing and contrasting its ending inventory value in terms of the three common inventory costing methods in order to help management determine the most appropriate method to use. The company determines three values, which are $96,000, $100,000, and $105,000. If management determines that $100,000 is the most appropriate value for its ending inventory, what inventory costing method has it most likely chosen?

a.FIFO inventory cost method

b.LIFO inventory cost method

c.Middle of cost or market method

d.Weighted average inventory cost method

Determine the gross profit using the periodic inventory system and the LIFO inventory method, assuming that 17 units were sold at a sales price of $17.

DateItemUnitsCostTotalJan. 1Inventory5$3$1512Purchase943618Purchase8648

Totals22$99

a.$220

b.$84

c.$205

d.$99

The inventory costing method that will yield an ending inventory that is closer to current prices is the

a.FIFO inventory cost method.

b.specific identification inventory cost method.

c.weighted average inventory cost method.

d.LIFO inventory cost method.

Estimating inventory may be needed for all of the following reasons EXCEPT

a.when a fire has destroyed the inventory and inventory records.

b.when it is impractical to take a physical inventory.

c.when the periodic method is used instead of taking a physical inventory.

d.when the inventory cost is based on a predetermined relationship.

A physical inventory is used to

a.investigate major errors.

b.help prevent employee thefts or misuses of inventory.

c.compare physical inventory to book inventory.

d.All of these choices are correct.