Question 1

Coulter Company uses the LIFO inventory method.The following data were available for the month of January,2019:
  Compute the following:
1.Beginning inventory
2.Ending inventory
3.Cost of goods available for sale
4.Cost of goods sold
5.Gross profit

Accepted Answer

The answer of Coulter Company uses the LIFO inventory method.The...

Question 2

Which of the following statements is correct with respect to the determination of cash flows from operating activities?

Accepted Answer

An increase in inventory is considered a use of cash in operating activities because it represents cash tied up in inventory that is not available for other uses. Therefore, it is subtracted from net income in the indirect method of calculating cash flows from operating activities.

Question 3

How much were inventory purchases when cost of goods sold was $250,000,beginning inventory was $20,000,and ending inventory was $25,000?

Accepted Answer

The answer of How much were inventory purchases when cost...

Question 4

Which of the following statements is correct when inventory unit costs are increasing?

Accepted Answer

When inventory unit costs are increasing, LIFO results in higher cost of goods sold, which reduces ending inventory and increases inventory turnover.

Question 5

Which of the following statements is correct when inventory unit costs are decreasing?

Accepted Answer

The answer of Which of the following statements is correct...

Question 6

What is the net adjustment to net income with respect to the determination of cash flows from operating activities when inventory increases $100,000 and accounts payable increases $20,000?

Accepted Answer

When inventory increases by $100,000, it means more money was spent on inventory than was sold during the period. This results in a decrease in cash flow from operating activities. Similarly, when accounts payable increases by $20,000, it means less money was paid to suppliers than was purchased during the period. This results in an increase in cash flow from operating activities. The net adjustment can be calculated by subtracting the increase in accounts payable from the increase in inventory: $100,000 - $20,000 = $80,000. Therefore, the net adjustment to net income is a decrease of $80,000.

Question 7

The records of Jimmy Company show 2019 purchases of $90,000.An actual count revealed a 2019 ending inventory of $8,000.The 2019 beginning inventory was $5,000.What was cost of goods sold for 2019?

Accepted Answer

The answer of The records of Jimmy Company show 2019...

Question 8

Which of the following businesses would not be as likely to use the specific identification method of inventory valuation?

Accepted Answer

A grocery store typically has large quantities of similar items, making it impractical to individually identify and track each item for inventory valuation purposes. Therefore, a grocery store would be more likely to use methods such as first-in, first-out (FIFO) or average cost to value its inventory.

Question 9

McMillan Company uses the periodic inventory system.It has compiled the following information in order to prepare the financial statements at December 31,2019:
  Calculate each of the following:
A.Cost of goods available for sale
B.Cost of goods sold
C.Gross profit

Accepted Answer

The answer of McMillan Company uses the periodic inventory system.It...

Question 10

Compute the missing amounts that are numbered in parentheses for the income statement of each independent case.(Hint: Each case need not be calculated in the numerical order of the missing numbers. )

Accepted Answer

The answer of Compute the missing amounts that are numbered...

Question 11

The following income statement is complete except for a few missing titles (bold lines on the left),and amounts (dotted lines on the right).
Prepare a complete income statement using the format and amounts provided.Fill in all items that are missing titles and amounts (ignore income taxes).

Accepted Answer

The answer of The following income statement is complete except...

Question 12

Which of the following statements is incorrect when inventory unit costs are increasing?

Accepted Answer

When inventory unit costs are increasing, LIFO will result in the highest cost of goods sold and the lowest income tax. Ending inventory using the average cost method may be higher or lower than ending inventory using LIFO, depending on the specific circumstances. However, cost of goods sold using the average cost method will never be less than cost of goods sold using FIFO, so statement D is incorrect.

Question 13

How much was ending inventory when sales revenue was $500,000,purchases were $310,000,beginning inventory was $22,000,and gross profit was $200,000.

Accepted Answer

The answer of How much was ending inventory when sales...

Question 14

Which of the following statements is incorrect?

Accepted Answer

The choice of an inventory costing method (such as LIFO, FIFO, or weighted average) is not dependent on the actual physical flow of goods. Companies can choose any method that best matches their financial reporting objectives, regardless of how inventory physically moves through their system.

Question 15

Jennings Company uses FIFO inventory costing.At the end of the annual accounting period,December 31,2019,the accounting records for the best-selling item in inventory showed the following:
  Calculate the following:
1.Goods available for sale
2.Ending inventory
3.Cost of goods sold

Accepted Answer

The answer of Jennings Company uses FIFO inventory costing.At the...

Question 16

Of the following,which is not a control for safeguarding inventories?

Accepted Answer

Having the same person responsible for receiving and shipping inventory creates a lack of segregation of duties and increases the risk of errors or fraud. The other options all provide effective controls for safeguarding inventory.

Question 17

Which of the following statements is correct?

Accepted Answer

Cost of goods available for sale is allocated between costs of goods sold and inventory at year-end. This is done in order to determine the value of inventory remaining at the end of a reporting period and the cost of the inventory that has been sold during the period.

Question 18

Of the following,which is not a reason for having controls to safeguard inventories?

Accepted Answer

Maintaining the LIFO Reserve is a financial accounting practice and is not directly related to inventory control or safeguarding inventory items. A, B, and D are all valid reasons for having controls in place to safeguard inventories.

Question 19

Which of the following statements is correct when inventory unit costs are decreasing?

Accepted Answer

The answer of Which of the following statements is correct...

Question 20

William Company has provided the following data:
  A.Calculate the following using both: FIFO and LIFO inventory methods.
  B.In times of rising unit costs,how does pretax income using FIFO compare to pretax income using LIFO? Explain your answer.

Accepted Answer

The answer of William Company has provided the following data:
...

Quiz 7: Reporting and Interpreting Cost of Goods Sold and Inventory

Coulter Company uses the LIFO inventory method.The following data were available for the month of January,2019: Compute the following: 1.Beginning inventory 2.Ending inventory 3.Cost of goods available for sale 4.Cost of goods sold 5.Gross profit

Which of the following statements is correct with respect to the determination of cash flows from operating activities?

How much were inventory purchases when cost of goods sold was $250,000,beginning inventory was $20,000,and ending inventory was $25,000?

Which of the following statements is correct when inventory unit costs are increasing?

Which of the following statements is correct when inventory unit costs are decreasing?

What is the net adjustment to net income with respect to the determination of cash flows from operating activities when inventory increases $100,000 and accounts payable increases $20,000?

The records of Jimmy Company show 2019 purchases of $90,000.An actual count revealed a 2019 ending inventory of $8,000.The 2019 beginning inventory was $5,000.What was cost of goods sold for 2019?

Which of the following businesses would not be as likely to use the specific identification method of inventory valuation?

McMillan Company uses the periodic inventory system.It has compiled the following information in order to prepare the financial statements at December 31,2019: Calculate each of the following: A.Cost of goods available for sale B.Cost of goods sold C.Gross profit

Compute the missing amounts that are numbered in parentheses for the income statement of each independent case.(Hint: Each case need not be calculated in the numerical order of the missing numbers. )

The following income statement is complete except for a few missing titles (bold lines on the left),and amounts (dotted lines on the right). Prepare a complete income statement using the format and amounts provided.Fill in all items that are missing titles and amounts (ignore income taxes).

Which of the following statements is incorrect when inventory unit costs are increasing?

How much was ending inventory when sales revenue was $500,000,purchases were $310,000,beginning inventory was $22,000,and gross profit was $200,000.

Which of the following statements is incorrect?

Jennings Company uses FIFO inventory costing.At the end of the annual accounting period,December 31,2019,the accounting records for the best-selling item in inventory showed the following: Calculate the following: 1.Goods available for sale 2.Ending inventory 3.Cost of goods sold

Of the following,which is not a control for safeguarding inventories?

Which of the following statements is correct?

Of the following,which is not a reason for having controls to safeguard inventories?

Which of the following statements is correct when inventory unit costs are decreasing?

William Company has provided the following data: A.Calculate the following using both: FIFO and LIFO inventory methods. B.In times of rising unit costs,how does pretax income using FIFO compare to pretax income using LIFO? Explain your answer.