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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) average cost.
B) base stock.
C) joint cost.
D) prime cost.

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Use the following information for questions Use the following information for questions -Assuming that perpetual inventory records are kept in dollars, the ending inventory on a FIFO basis is A) $1,900. B) $1,920. C) $2,065. D) $2,100. -Assuming that perpetual inventory records are kept in dollars, the ending inventory on a FIFO basis is


A) $1,900.
B) $1,920.
C) $2,065.
D) $2,100.

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C

Which of the following statements with respect to the impact of inventory errors is not correct? All else being equal,


A) An overstatement of ending inventory will result in an understatement of income.
B) An overstatement of ending inventory will result in an overstatement of income.
C) An overstatement of beginning inventory will result in an understatement of income.
D) An understatement of beginning inventory will cause cost of goods sold to be understated

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Which of the following does not correctly describe a periodic inventory accounting system?


A) In a periodic system cost of goods sold are calculated every time a sale is made.
B) In a periodic system, costs of goods sold are a residual amount.
C) In a periodic system assuming a FIFO cost flow, the cost of goods sold would equal those from a perpetual system
D) In a periodic system, inventory and cost of goods sold must be updated at the end of

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Teel Corp.'s accounts payable at December 31, 2010, totalled $900,000 before any necessary year-end adjustments relating to the following transactions:  Teel Corp.'s accounts payable at December 31, 2010, totalled $900,000 before any necessary year-end adjustments relating to the following transactions:  At December 31, 2010, what amount should Teel report as total accounts payable? A) $1,100,000. B) $1,150,000 C) $1,446,000. D) $1,511,000 At December 31, 2010, what amount should Teel report as total accounts payable?


A) $1,100,000.
B) $1,150,000
C) $1,446,000.
D) $1,511,000

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Goods on consignment are


A) included in the consignee's inventory.
B) recorded in a Consignment Out account which is an inventory account.
C) recorded in a Consignment In account which is an inventory account.
D) all of these

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B

Which of the following does not correctly describe the weighted average costing method?


A) This method prices items in inventory on the basis of the average cost of beginning inventory.
B) This method prices items in inventory on the basis of the average cost of goods available for sale during the period.
C) This method takes into account that the volumes of goods acquired at each price are different.
D) None of these

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Use the following information for questions Use the following information for questions -Assuming Chu uses a perpetual inventory system, which entry would have been made to account for the April 1 sale? A) Debit: Cost of goods sold and Credit: Inventory $350 B) Debit: Cost of goods sold and Credit: Purchases $350 C) Debit: Cost of goods sold and Credit: Purchases $314 D) Debit: Cost of goods sold and Credit: Inventory $314 -Assuming Chu uses a perpetual inventory system, which entry would have been made to account for the April 1 sale?


A) Debit: "Cost of goods sold" and Credit: "Inventory" $350
B) Debit: "Cost of goods sold" and Credit: "Purchases" $350
C) Debit: "Cost of goods sold" and Credit: "Purchases" $314
D) Debit: "Cost of goods sold" and Credit: "Inventory" $314

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In no case can "market" in the lower of cost and market rule be more than


A) estimated selling price in the ordinary course of business.
B) estimated selling price in the ordinary course of business less reasonably predictable costs of completion and disposal.
C) estimated selling price in the ordinary course of business less reasonably predictable
D) estimated selling price in the ordinary course of business less reasonably predictable.

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Hoskins Company had a gross profit of $270,000, total purchases of $320,000, and an ending inventory of $150,000 in its first year of operations as a retailer.Hoskins' sales in its first year must have been


A) $120,000.
B) $160,000.
C) $440,000.
D) $360,000.

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Which of the following best describes the concept of a basket purchase?


A) The purchase of a group of units with similar characteristics at a single lump-sum price.
B) The purchase of individual units with similar characteristics priced individually.
C) The purchase of a group of units with different characteristics at a single lump-sum price.
D) The purchase of individual units with different characteristics priced individually.

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Chen Co.accepted delivery of merchandise which it purchased on account.As of December 31, Chen 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) net income, current assets, and retained earnings were understated.
B) net income was correct and current assets were understated.
C) net income was understated and current liabilities were overstated.
D) net income was overstated and current assets were understated.

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How should the following costs affect a retailer's inventory valuation? How should the following costs affect a retailer's inventory valuation?

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Which of the following does not correctly describe the implications of an executory contract on the accounting entries and/or disclosures to be made by the purchaser and/or seller?


A) Assets and liabilities are usually recorded at inception of the contract.
B) Assets and liabilities are usually not recorded at inception of the contract.
C) Contract details should be disclosed if the amounts are abnormal in relation to the entity's normal business operations.
D) Assets and liabilities are recognized as performance has occurred.

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Use the following information for questions Use the following information for questions -Assuming that Lock does not maintain perpetual inventory records, what should be the inventory at January 31, using the weighted-average inventory method, rounded to the nearest dollar? A) $10,505. B) $10,237. C) $10,260. D) $10,360. -Assuming that Lock does not maintain perpetual inventory records, what should be the inventory at January 31, using the weighted-average inventory method, rounded to the nearest dollar?


A) $10,505.
B) $10,237.
C) $10,260.
D) $10,360.

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Use the following information for questions During 2010 Ebert Corporation transferred inventory to Holger Corporation and agreed to repurchase the merchandise early in 2011.Holger then used the inventory as collateral to borrow from Norwalk Bank, remitting the proceeds to Ebert.In 2011 when Ebert repurchased the inventory, Holger used the proceeds to repay its bank loan. -On whose books should the cost of the inventory appear at the December 31, 2010 balance sheet date?


A) Ebert Corporation
B) Holger Corporation
C) Norwalk Bank
D) Holger Corporation, with Ebert making appropriate note disclosure of the transaction

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A

Use the following information for questions Use the following information for questions -Assuming Chu uses a perpetual inventory system, the entry to account for the March 1 purchase is A) Debit: Inventory and Credit: Accounts Payable $875 B) Debit: Purchases and Credit: Accounts Payable $875 C) Debit: Accounts Payable and Credit: Purchases $875 D) Debit: Accounts Payable and Credit: Inventory $875 -Assuming Chu uses a perpetual inventory system, the entry to account for the March 1 purchase is


A) Debit: "Inventory" and Credit: "Accounts Payable" $875
B) Debit: "Purchases" and Credit: "Accounts Payable" $875
C) Debit: "Accounts Payable" and Credit: "Purchases" $875
D) Debit: "Accounts Payable" and Credit: "Inventory" $875

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Which of the following statements regarding borrowing costs is correct?


A) Neither Private entity GAAP nor IFRS usually require disclosure these items.
B) They are usually amortized until the majority (51%) of the underlying products have been sold.
C) They are usually treated as product costs if they are incurred to bring inventories to a condition ready for sale.
D) All of these

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The cost of raw material plus direct labour cost plus overhead


A) Constitutes the work-in-process inventory, when the process has not yet been completed.
B) Constitutes the finished goods inventory, when the process has been completed.
C) (a) and (b)
D) None of these.

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Which of the following does not correctly describe the FIFO costing method?


A) This method assumes that the oldest inventory costs are the first costs recorded for cost of goods sold.
B) This method assumes that most current inventory costs are the first costs recorded for cost of goods sold.
C) This method approximates the physical flow of most types of goods.
D) This method is permitted under private entity GAAP

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