Quiz 6 (Midterm 2)

Front 1

If goods in transit are shipped FOB destination the seller has legal title to the goods

Back 1

until they are delivered.

Front 2

Goods held on consignment are

Back 2

never owned by the consignee.

Front 3

Manufacturers usually classify inventory into all the following general categories except:

Back 3

merchandise inventory.

Front 4

The LIFO inventory method assumes that the cost of the latest units purchased are

Back 4

the first to be allocated to cost of goods sold.

Front 5

Baker Bakery Company just began business and made the following four inventory purchases in June:

June 1 150 units $780

June 10 200 units 1,170

June 15 200 units 1,260

June 28 150 units 990

$4,200

A physical count of merchandise inventory on June 30 reveals that there are 210 units on hand. Using the FIFO inventory method, the amount allocated to ending inventory for June is

Back 5

$1,368.

Front 6

Atom Company just began business and made the following four inventory purchases in June:

June 1 150 units $825

June 10 200 units 1,120

June 15 200 units 1,140

June 28 150 units 885

$3,970

A physical count of merchandise inventory on June 30 reveals that there are 200 units on hand. Using the LIFO inventory method, the value of the ending inventory on June 30 is

Back 6

$1,105

Front 7

A company just began business and made the following four inventory purchases in June:

June 1 150 units $825

June 10 200 units 1,120

June 15 200 units 1,140

June 28 150 units 885

$3,970

A physical count of merchandise inventory on June 30 reveals that there are 200 units on hand. Using the average-cost method, the amount allocated to the ending inventory on June 30 is

Back 7

$1,134

Front 8

Olympus Climbers Company has the following inventory data:

July 1Beginning inventory20 units at $19$380

7Purchases70 units at $201,400

22Purchases10 units at $22220

$2,000

A physical count of merchandise inventory on July 30 reveals that there are 32 units on hand. Using the FIFO inventory method, the amount allocated to cost of goods sold for July is

Back 8

$1,340

Front 9

Quiet Phones Company has the following inventory data:

July 1Beginning inventory20 units at $19$380

7Purchases70 units at $201,400

22Purchases10 units at $22220

$2,000

A physical count of merchandise inventory on July 30 reveals that there are 32 units on hand. Using the LIFO inventory method, the amount allocated to cost of goods sold for July is

Back 9

$1,380.

Front 10

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

Back 10

Under FIFO, the ending inventory is based on the latest units purchased.

Front 11

In periods of rising prices, which is an advantage of using the LIFO inventory costing method?

Back 11

Cost of goods sold will include latest (most recent) costs and thus will be more realistic

Front 12

At May 1, 2014, Heineken Company had beginning inventory consisting of 200 units with a unit cost of $7. During May, the company purchased inventory as follows:
▪ 400 units at $7
▪ 600 units at $8
The company sold 1,000 units during the month for $12 per unit. Heineken uses the average cost method. Heineken's gross profit for the month of May is

Back 12

$4,500.

Front 13

In a period of declining prices, which of the following inventory methods generally results in the lowest balance sheet figure for inventory?

Back 13

FIFO method

Front 14

In a period of increasing prices, which inventory flow assumption will result in the lowest amount of income tax expense?

Back 14

LIFO

Front 15

When applying the lower of cost or market rule to inventory valuation, market generally means

Back 15

current replacement cost.

Front 16

The situation that requires a departure from the cost basis of accounting to the lower of cost or market basis in valuing inventory is necessitated by

Back 16

a decline in the value of the inventory.

Front 17

Nelson Corporation sells three different products. The following information is available on December 31:

Inventory item UnitsCostperunit Market value per unit

X 150 $4.00 $3.50

Y 300 $2.00 $1.50

Z 750 $3.00 $4.00

When applying the lower of cost or market rule to each item, what will Nelson's total ending inventory balance be?

Back 17

$3,225

Front 18

The following information was available for Camara Company at December 31, 2014: beginning inventory $80,000; ending inventory $120,000; cost of goods sold $560,000; and sales $800,000. Camara’s inventory turnover ratio in 2014 was

Back 18

5.6 times.

Front 19

The following information was available for Bowyer Company at December 31, 2014: beginning inventory $90,000; ending inventory $70,000; cost of goods sold $880,000; and sales $1,200,000. Bowyer’s days in inventory in 2014 was

Back 19

33.2 days

Front 20

The LIFO reserve is

Back 20

the difference between the value of the inventory under LIFO and the value under FIFO.