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70 terms

Chp 8 acctg

STUDY
PLAY
In a perpetual inventory system, the cost of purchases is debited to
C. Inventory
In a periodic inventory system, the cost of purchases is debited to
A. Purchases
In a perpetual inventory system, the cost of inventory sold is
C. Debited to cost of goods sold
In a periodic inventory system, the cost of inventories sold is
D. Not recorded at the time of sale
The inventory method that will always produce the same amount for cost of goods sold in a periodic inventory system as in a perpetual inventory system would be
A. FIFO
The Mateo Corporation's inventory at December 31, 2011, was $325,000 based on a physical count priced at cost, and before any necessary adjustment for the following:
C. 405000
Ending inventory is equal to the cost of items on hand plus
C. Items in transit sold fob destination
Purchases equal the invoice amount
C. Plus freight-in, less purchase discounts
Using the gross method, purchase discounts lost are
A. included in purchases
Under the net method, purchase discounts lost are
C. Included interest expense
Inventory does not include
C. Equipment used in the manufacturing of assets for sale
Under the gross method, purchase discounts taken are
D. Deducted from purchases
Alison's dress shop buys dresses from McGuire Manufacturing. Alison purchased dresses from McGuire on July 17, and received an invoice with a list price amount of $6,000 and payment terms of 2/10, n/30. Alison uses the net method to record purchases. Alison should record the purchase at:
B. 5880
What is ending inventory assuming Northwest uses the gross method to record purchases?
B. 112550
Assuming Northwest uses the gross method to record purchases, what is the cost of goods available for sale?
D. 492550
Assuming CBC uses the gross method to record purchases, ending inventory would be
C. 15480
What is cost of goods available for sale, assuming CBC uses the gross method?
C. 331480
Cost of goods sold is given by
D. Net purchases + beginning inventory - ending inventory
The LIFO Conformity Rule states that if LIFO is used for
B. Tax purposes, it must be used for financial reporting
The largest expense on a retailer's income statement is typically
B. Cost of goods sold
In a perpetual average cost system
A. A new weighted-average unit cost is calculated each time additional units are purchased
In a period when costs are rising and inventory quantities are stable, the inventory method that would result in the highest ending inventory
C. FIFO
During periods when costs are rising and inventory quantities are stable, cost of goods sold will be
C. Lower under average cost than LIFO
During periods when costs are rising and inventory qualities are stable, ending inventory will be
D. Higher under FIFO than LIFO
In periods when costs are rising, LIFO liquidations
D. Distort the net income
The use of LIFO during a long inflationary period can result in
C. Significant cash flow advantages over FIFO
Company A is identical to Company B in every regard except that Company A uses FIFO and Company B uses LIFO. In an extended period of rising inventory costs, Company A's gross profit and inventory turnover ratio, compared to Company B's, would be:
C. higher, lower
Company C is identical to Company D in every respect except that Company C uses LIFO and Company D uses average costs. In an extended period of rising inventory costs, Company C's gross profit and inventory turnover ratio, compared to Company D's, would be:
D. lower, higher
Fulbright Corp. uses the periodic inventory system. During its first year of operations, Fulbright made the following purchases (listed in chronological order of acquisition) Ending inventory using the average cost method (rounded) is:
C. 707
Fulbright Corp ending inventory using the FIFO method is
D. 600
Fulbright Corp ending inventory using the LIFO method is
B. 1000
What is Nu's net income if it elects FIFO?
B. 288
What is Nu's net income if it elects LIFO?
B. 144
What is Nu's gross profit ratio if it elects LIFO?
C. 40%
What is Nueva's gross profit ratio if it elects FIFO?
B. 32%
What is Nueva's net income if it elects FIFO
D. 372
What is Nueva's net income if it elects LIFO
B. 262
Herb's Chemicals ending inventory assuming LIFO in a periodic inventory system would be:
A. 5040
Herb's Chemical ending inventory assuming LIFO in a perpetual inventory system would be
B. 5060
Herb's Chemical ending inventory assuming FIFO is
A. 5140
Herb's Chemical ending inventory under a periodic inventory system assuming average cost is
A. 5087
Texas Petrochemical ending inventory assuming LIFO and a periodic inventory system is
D. 1470
Texas Petrochemical ending inventory assuming LIFO and a perpetual inventory system is
A. 1545
The use of LIFO in accounting for a firm's inventory
C. Usually provides a better match of expense with revenues
In a period when costs are falling and inventory quantities are stable, the lowest taxable income would be reported by using the inventory method of
D. FIFO
The primary reason for the popularity of LIFO is that it
B. Saves income taxes currently
When reported in financial statements, a LIFO allowance account usually
B. Is added to LIFO cost to indicate what the inventory would cost on a FIFO basis
When reported in financial statements, a LIFO allowance account usually
B. Is added to LIFO cost to indicate what the inventory would cost on a FIFO basis
If a company uses LIFO, a LIFO liquidation is problematic for a company's income taxes
A. When inventory purchase costs are rising
GG Inc. uses LIFO. GG disclosed that if FIFO had been used, inventory at the end of 2011 would have been $15 million higher than the difference between LIFO and FIFO at the end of 2010. Assuming GG has a 40% income tax rate:
C. reported Net Income 9 million higher using FIFO rather than LIFO
HH Company uses LIFO. HH disclosed that if FIFO had been used, inventory at the end of 2011 would have been $20 million lower than the difference between LIFO and FIFO at the end of 2010. Assuming HH has a 30% income tax rate:
D. CGS 20 million higher if used FIFO rather than LIFO
During 2011, WW Inc. reduced its LIFO eligible inventory quantities due to a problem with its major supplier. The effect of this liquidation was to increase its cost of goods sold by approximately $50 million. WW has a 40% income tax rate. If WW had not experienced these supplier problems and the resulting liquidation,
D. Net income would have been 30 million higher with purchases prices DECLINING
Thompson's 2011 gross profit ratio is:
C. 20%
Thompson's 2011 inventory turnover ratio is
B. 4.00
Robertson Corporation's inventory balance was 22000 at the beginning of the year and 20000 at the end. The inventory turnover ratio for the year was 6.0 and the gross profit ratio 40%. What were net sales for the year?
D. 21000
ATC's gross profit ratio (rounded) in 2011 is:
A. 53.4%
ATC's inventory turnover ratio for 2011 is
B 2.76
The average days inventory for ATC for 2011 is
C. 132 days
Dollar value LIFO
A. Starts with ending inventory measured at current costs and recreates LIFO layers for measuring inventory costs
Compared to dollar-value LIFO, unit LIFO is
C. More costly to implement
Bond Company adopted the dollar-value LIFO inventory method on January 1, 2011. In applying the LIFO method, Bond uses internal cost indexes and the multiple-pools approach. The following data were available for Inventory Pool No. 3 for the two years following the adoption of LIFO: Under the dollar-value LIFO method the inventory at December 31, 2012, should be
A. 357600
What inventory balance should Badger report on its 12/31/11 balance sheet?
B. 121000
Suppose that Badger's 2012 ending inventory, valued at year-end costs, was $143,000 and that the relative cost index for this inventory in 2012 was 1.10. In determining the inventory balance should Badger report in its 12/31/12 balance sheet:
C. An additional layer of 11000 is added to the 1/1/12 balance
Suppose that Badger's 2013 ending inventory, valued at year-end costs, was 153600 and that the relative cost index for this inventory in 2013 was 1.20. What inventory balance would Badger report on its 12/31/13 balance sheet?
B. 129800
Ramen Inc adopted dollar-value LIFO as of Jan 1, 2011, when it had a cost inventory of 600000. Its inventory as of Dec 31,2011 was 667800 at year-end costs and the cost index was 1.06. What was DVL inventory on Dec 31,2011?
B. 631800
Udon Inc. adopted dollar value LIFO as of Jan 1,2011 when it had an inventory of 700000. Its inventory as of Dec 31, was $777, 000 at year-end costs and the cost index was 1.05. What was DVL inventory on December 31, 2011?
C. 742000
Linguini Inc. adopted dollar-value LIFO (DVL) as of January 1, 2011, when it had an inventory of $800,000. Its inventory as of December 31, 2011, was $811,200 at year-end costs and the cost index was 1.04. What was DVL inventory on December 31, 2011?
A. 780000
Buckeye Corporation adopted dollar-value LIFO on January 1, 2011, when the inventory value was $500,000 and the cost index was 1.0. On December 31, 2011, the inventory value at year-end costs was $535,000 and the cost index was 1.06. Buckeye would report a LIFO inventory of:
C. 505000
Tiger Inc. adopted dollar-value LIFO on January 1, 2011, when the inventory value was $360,000 and the cost index was 1.25. On December 31, 2011, the inventory was valued at year-end cost of $395,000 and the cost index was 1.30. Tiger would report a LIFO inventory of:
D. 380600
A company that prepares its financial statements according to IFRS can use each of the following inventory valuation methods except
C. LIFO