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Exam 7: Inventories

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Question 71

True/False

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Inventory errors, if not discovered, will self-correct in two years.

A) True
B) False

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Question 72

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The following lots of a particular commodity were available for sale during the year: The firm uses the periodic system and there are 20 units of the commodity on hand at the end of the year. What is the amount of cost of good sold for the year according to the average cost method?

A) $1,380
B) $1,375
C) $1,510
D) $1,250

E) All of the above
F) B) and D)

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Question 73

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List three different security measures taken by stores to safeguard inventory.

When merchandise sold is assumed to be in the order in which the purchases were made, the company is using

In the retail inventory method, the cost to retail ratio is equal to the cost of goods sold divided by the retail price of the good sold.

The units of an item available for sale during the year were as follows: There are 19 units of the item in the physical inventory at December 31. The periodic inventory system is used. Determine the ending inventory cost using LIFO.

Inventory turnover measures the length of time is takes to acquire, sell and replace the inventory.

Under the periodic inventory system, the merchandise inventory account continuously discloses the amount of inventory on hand.

Based on the following data, calculate the estimated cost of the merchandise inventory on March 31 using the retail method.

Cost flow is in the reverse order in which costs were incurred when using

The inventory method that assigns the most recent costs to cost of goods sold is

Stevens Company started the year with an inventory cost of $145,000. During the month of January they purchased inventory that cost of $53,000. January sales totaled $140,000. Estimated gross profit is 35%. The estimated ending inventory as of January 31 is

If a company mistakenly counts more items during a physical inventory than actually exist, how will the error affect their bottom line?

Average inventory is computed by adding the inventory at the beginning of the period to the inventory at the end of the period and dividing by two.

The inventory data for an item for November are: Using a perpetual system, what is the cost of the merchandise sold for November if the company uses LIFO?

If the estimated rate of gross profit is 30%, what is the estimated cost of the merchandise inventory on September 30, based on the following data?

If the revenues are correctly reported and the Gross Profit of a company is understated, what is the effect on Owner's Equity?

Based on the following information: compute (a) Inventory turnover; (b) Average daily cost of merchandise sold; and (c) Number of days' sales in inventory for 2011. Use a 365-day year. (d) If an inventory turnover of 12 is average for the industry, how is this company doing?

During a period of consistently rising prices, the method of inventory that will result in reporting the greatest cost of merchandise sold is

Which of the following methods is appropriate for a business whose inventory consists of a relatively small number of unique, high-cost items?