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Exam 7: Inventory and Cost of Goods Sold

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Question 51

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Which of the following statements is/are true with regards to all inventory costing methods?

A) The ending inventory balance and cost of goods sold move in the same direction.
B) The ending inventory balance and the cost of total assets move in the opposite direction.
C) The ending inventory balance and net income move in the same direction.
D) All of the answers are true.

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Question 52

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Which of the following would not be affected by the choice of an inventory costing method (that is between FIFO,LIFO,weighted average,and specific identification) ?

A) Net sales
B) Cost of goods sold
C) Gross profit
D) Net income

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Question 53

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Your company buys 500 pairs of socks at $3 each (including other purchasing costs such as transportation) and sells them for $5 each. Which of the following statements is true?

A rising balance in the inventory account and a falling inventory turnover ratio implies that the inventory build up is occurring because:

Generally,which inventory costing method approximates most closely the current cost for each of the following?

Widgets Inc.,a company that sells only one type of widget,had a beginning inventory in September of 11 units,at $200/unit.Throughout the first two weeks,they purchased additional inventory in the amount of 5 widgets at $209/widget and 9 widgets at $220 a piece.During the third week,they sold 12 widgets at $420/each.If replacement cost fell to $205 in October,and the company is using FIFO,what is the adjustment that would be made to the Inventory account?

A $15,000 overstatement of the 2018 ending inventory was discovered after the financial statements for 2018 were prepared.How would that inventory error impact the 2018 financial status?

The LIFO method assumes that the costs for the newest goods (the last ones in)are used first and the older costs are left in ending inventory.

Your company sells $469,300 of goods during the year at a cost of goods sold of $398,600.Inventory was $29,783 at the beginning of the year and $34,038 at the end of the year. What is the inventory turnover ratio?

A benefit of inventory turnover ratios is that firms in the same industry should have similar ratios,thus making comparison easier.

The effects of inventory errors are mitigated by the fact that they are confined to one year.

Which of the following would cause the greatest increase in a company's inventory turnover ratio?

If a company purchased 200 units of inventory at $9 per unit and 300 units at $10 per unit,its weighted average unit cost for this inventory would be:

All of the following represent the cost of goods sold equation, $\bold{except}$

An auto manufacturer's inventory would not include:

A company's inventory records contain the following information: $\begin{array} { | r | r | r | } \hline \text { Begirring Irventory: } & 300 \text { units } & \$ 780 \\\hline \text { Purchased on June 10 } & 400 \mathrm { urits } & 1,170 \\\hline \text { Purchased on Jurne 15 } & 500 \mathrm { urits } & 1,260 \\\hline \text { Purchared on Jure 28 } & \mathbf { 3 0 0 u n i t s } & 990 \\\hline & 1,500 & \$ 4,200 \\\hline\end{array}$ -According to the above table.The company sold 1,000 units during June and 500 units were in its ending inventory on June 30. If the company uses the FIFO method,what is the cost of goods sold?

Merchandisers have inventories of finished goods only; manufacturers have inventories of raw materials only.

A merchandise company's beginning inventory plus merchandise purchases equals:

An increase in inventory levels is always a sign of inefficiency in inventory management.

Which of the following inventory method will give the highest net earnings in a period of falling prices?