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Exam 7: Inventories

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Question 61

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A major criticism of the LIFO method is that it magnifies the effects of the business cycle on business income.

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Question 62

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Use this information to answer the following question. A periodic inventory system is used. Using LIFO,cost of goods sold is

A) $1,740.
B) $4,464.
C) $1,332.
D) $4,056.

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Question 63

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During April,Leary Company sold 900 units of Product Q.Its beginning inventory and purchases during the month were as follows: Compute the cost of the ending inventory under each of three methods: (a)average-cost,(b)LIFO,and (c)FIFO.Assume the periodic inventory system is used.(Show your work.)

A retail company has goods available for sale of $1,000,000 at retail and $400,000 at cost and ending inventory of $98,000 at retail.What is the estimated cost of goods sold?

Which of the following costs normally would be included in the inventory cost?

Use this inventory information for the month of May to answer the following question. What is ending inventory under the specific identification method?

Under the perpetual inventory system,cost of goods sold is accumulated as sales are made throughout the accounting period.

Which of the following terms best describes the assumption made in applying the four inventory methods?

Use this inventory information for the month of November to answer the following question. Assuming that a periodic inventory system is used,what is cost of goods sold under the average-cost method?

When the cost of inventory is written down due to a market decline,a loss must be recorded.

The lower-of-cost-or-market rule implies that it is misleading to carry inventory at a cost that is in excess of its market value.

The higher the inventory turnover,the lower the days' inventory on hand.

Indirect materials and indirect labor are components of manufacturing overhead.

A cost-to-retail percentage must be calculated when applying the gross profit method.

Ending merchandise inventory for LIFO will be the same dollar amount under a periodic inventory system as under a perpetual inventory system.

The average-cost method produces an ending inventory figure that is higher than the figures produced by FIFO and LIFO.

During the year,Toyz for Boyz had beginning inventory of $350,000,ending inventory of $320,000,and cost of goods sold of $1,507,500.The days' inventory on hand was

In general,in times of declining prices,using FIFO has a favorable effect on cash flows.

Use this information to answer the following question. A periodic inventory system is used. Using FIFO,the cost assigned to ending inventory is

Use this information to answer the following question. A periodic inventory system is used; ending inventory is 150 units. What is ending inventory under the average-cost method?