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Exam 5: Inventories and Cost of Sales

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Question 111

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Overstating beginning inventory will understate cost of goods sold and net income.

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B) False

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Question 112

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Explain the reason a company might use the retail inventory method for valuing inventory.

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The retail method is generally used to p...

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Question 113

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A company has beginning inventory of 15 units at a cost of $12 each on October 1.On October 5,it purchases 10 units at $13 per unit.On October 12 it purchases 20 units at $14 per unit.On October 15,it sells 30 units.Using the FIFO periodic inventory method,what is the value of the inventory at October 15 after the sale?

Beckenworth had cost of goods sold of $9,421 million,ending inventory of $2,089 million,and average inventory of $1,965 million.Its days' sales in inventory equals: (Use 365 days a year.)

Internal controls that should be applied when a business takes a physical count of inventory should include all of the following except:

A company reported the following data: Required: 1.Calculate the company's merchandise inventory turnover for each year. 2.Comment on the company's efficiency in managing its inventory.

The LIFO conformity rule:

Explain how the lower of cost or market rule is used to value inventory.

Explain how the inventory turnover ratio and the days' sales in inventory ratio are used to evaluate inventory management.

Eastview Company uses a periodic LIFO inventory system,and has the following purchases and sales: -What is the value of ending inventory?

A company's inventory records report the following: On August 15,it sold 30 units.Using the FIFO perpetual inventory method,what is the value of the inventory at August 15 after the sale?

When purchase costs regularly rise,the ________ method of inventory valuation yields the lowest gross profit and net income,providing a tax advantage.

A company's inventory records report the following in November of the current year: On November 8,it sold 12 units for $54 each. -Using the LIFO perpetual inventory method,what amount of gross profit was earned from the 12 units sold?

Under FIFO,the most recent costs are assigned to ending inventory.

Carolina Company uses the perpetual LIFO method for valuing its ending inventory.The following financial statement information is available for its first year of operation: Carolina's ending inventory using the perpetual LIFO method was $8,700.Carolina's accountant determined that had the company used perpetual FIFO,the ending inventory would have been $9,100. a.Determine what the income before taxes would have been,had Carolina used the FIFO method of inventory valuation instead of LIFO. b.What would be the difference in income taxes between LIFO and FIFO,assuming a 30% tax rate? c.If Carolina wanted to lower the amount of income taxes to be paid,which method would it choose?

Salmone Company reported the following purchases and sales of its only product.Salmone uses a perpetual inventory system. -Determine the cost assigned to the ending inventory using FIFO.

A company had the following purchases and sales during its first year of operations: On December 31,there were 26 units remaining in ending inventory. -Using the periodic LIFO inventory costing method,what is the cost of the ending inventory? (Assume all sales were made on the last day of the month.)

Apply the retail method to the following company information to estimate the cost of the ending inventory for the current period.

A ________ is recorded when inventory damage or obsolescence occurs.

Goods in transit are automatically included in inventory regardless of whether title has passed to the buyer.