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Exam 11: Inventory

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Question 21

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Which of the following is not a common cost flow method used in costing inventory?

A) First-in, first-out
B) Middle-in, first-out
C) Last-in, first-out
D) Average cost

E) All of the above
F) None of the above

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Question 22

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Under the LIFO method and a perpetual inventory system, companies charge to cost of goods sold the cost of the

A) last purchase of the period.
B) oldest purchase prior to sale.
C) most recent purchase prior to sale.
D) last purchase of the prior period.

E) C) and D)
F) B) and C)

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Question 23

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Winters Company identifies the following items for possible inclusion in the physical inventory. Indicate whether each item should 1. Goods shipped on consignment by Winters to another company. 2. Goods in transit from a supplier shipped FOB destination. 3. Goods shipped via common carrier to a customer with terms FOB shipping point. 4. Goods held on consignment from another company.

An auto manufacturer would classify vehicles in various stages of production as

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.

Henri Company's inventory and purchases accounts show the following data: $\begin{array}{llrr}&&\text {Units }&\text {Unit Cost }\\\hline\text { Inventory, } & \text { January 1 } & 10,000 & \$ 9.20 \\\text { Purchases: } & \text { June 18 } & 9,000 & 8.00 \\& \text { Novermber 8 } & 6,000 & 7.25\end{array}$ A physical inventory on December 31 shows 3,000 units on hand. Henri sells the units for $12 each. Henri uses the periodic inventory method. What is the difference in net income if LIFO rather than FIFO is used?

The LCNRV basis of valuing inventories is an example of

The cost of goods available for sale is allocated between

Elly Company uses a periodic inventory system. Details for the inventory and purchases accounts for the month of January, 2022 are as follows: $\begin{array}{llrr}&\text { Units } &\text { Per unit price } & \text { Total }\\\hline\text { Balance, } 1 / 1 / 22 &200& \$ 5.00 & \$ 1,000 \\\text { Purchase, } 1 / 15 / 22 & 100 & 5.30 & 530 \\\text { Purchase, } 1 / 28 / 22 & 100 & 5.50 & 550\end{array}$ An end of the month (1/31/20) inventory showed that 150 units were on hand. If the company uses LIFO, what is the cost of the ending inventory?

If beginning inventory is understated by $15,000, the effect of this error in the current period is

Inventories are reported in the current assets section of the balance sheet immediately below receivables.

Which of the following should be included in the ending inventory of a company?

Which of the following statements is true regarding inventory cost flow methods?

Norris Company uses the perpetual inventory system and had the following purchases and sales during March. Instructions Using the inventory and sales data above, calculate the cost assigned to cost of goods sold in March and to the ending inventory at March 31 using (a) FIFO and (b) LIFO.

The cost flow method that often parallels the actual physical flow of merchandise is the

The widely used method (methods) of estimating inventories is (are)

Purchased goods that have been shipped FOB destination but which are in transit at the end of the period should be excluded from the buyer's physical count of ending inventory.

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

Errors occasionally occur when physically counting inventory items on hand. Identify the financial statement effects of an overstatement of the ending inventory in the current period. If the error is not corrected, how does it affect the financial statements for the following year?

Pasquale has the following inventory information. $\begin{array}{rrrr}\text { July } 1&\text { Beginning Inventory }&20 \text { units at } \$ 19&\$380\\7 & \text { Purchases } & 70 \text { units at } \$ 20 & 1,400 \\22 & \text { Purchases } & 10 \text { units at } \$ 24 & 240\\&&&\$2,020\end{array}$ A physical count of merchandise inventory on July 31 reveals that there are 30 units on hand. Using a periodic inventory system and the average-cost method, the cost of ending inventory is