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Exam 6: Inventories Periodic Approach

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Question 31

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Effie Company uses a periodic inventory system. Details for the inventory account for the month of January, 2018 are as follows: An end of the month (1/31/18) inventory showed that 160 units were on hand. If the company uses FIFO and sells the units for $10 each, what is the gross profit for the month?

A) $1,120
B) $1,188
C) $1,532
D) $1,600

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Question 32

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The lower-of-cost-or-net realizable value basis is an example of the accounting concept of conservatism.

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Question 33

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Overstating ending inventory will overstate all of the following except

Goods that have been purchased FOB destination but are in transit, should be excluded from a physical count of goods.

The cost of goods purchased during a period plus the beginning inventory is the amount of goods ________________ during the period.

In periods of inflation, phantom or paper profits may be reported as a result of using the

Which of the following statements is correct with respect to inventories?

Accounting for inventories is important because inventories affect the ______________ section of the balance sheet and the ______________ section on the income statement.

Romanoff Industries had the following inventory transactions occur during 2018: The company sold 150 units at $70 each and has a tax rate of 30%. Assuming that a periodic inventory system is used, what is the company's after-tax income using FIFO? (rounded to whole dollars)

Romanoff Industries had the following inventory transactions occur during 2018: The company sold 150 units at $70 each and has a tax rate of 30%. Assuming that a periodic inventory system is used, what is the company's after-tax income using LIFO? (rounded to whole dollars)

Inventories are defined by IFRS as

If the unit cost of inventory has continuously increased, the ______________, first-out inventory valuation method will result in a higher valued ending inventory than if the ______________, first-out method had been used.

Goods out on consignment should be included in the inventory of the consignor.

In a period of rising prices, the costs allocated to ending inventory may be understated in the

If a company has no beginning inventory and the unit cost of inventory items does not change during the year, the value assigned to the ending inventory will be the same under LIFO and average cost flow assumptions.

Galena Pharmacy reported cost of goods sold as follows: Jim Holt, the bookkeeper, made two errors: (1) 2018 ending inventory was overstated by $7,000. (2) 2019 ending inventory was understated by $16,000. Instructions Assuming the errors had not been corrected, indicate the dollar effect that the errors had on the items appearing on the financial statements listed below. Also indicate if the amounts are overstated (O) or understated (U).

The specific identification method

Partridge Bookstore had 500 units on hand at January 1, costing $9 each. Purchases and sales during the month of January were as follows: Partridge does not maintain perpetual inventory records. According to a physical count, 365 units were on hand at January 31. The cost of the inventory at January 31, under the LIFO method is:

Effie Company uses a periodic inventory system. Details for the inventory account for the month of January, 2018 are as follows: An end of the month (1/31/18) inventory showed that 160 units were on hand. If the company uses LIFO, what is the value of the ending inventory?

The factor which determines whether or not goods should be included in a physical count of inventory is