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Exam 7: Inventories and Cost of Goods Sold

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Question 61

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Which of the following statements regarding inventory calculations is true?

A) Beginning inventory + net purchases - ending inventory = cost of goods sold.
B) Goods available for sale + ending inventory = cost of goods sold.
C) Beginning inventory + net purchases - ending inventory = goods available for sale.
D) Goods available for sale + cost of goods sold = ending inventory.

E) B) and C)
F) A) and B)

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Question 62

Multiple Choice

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Use the information above to answer the following question.What is the journal entry to be recorded by E.Flynn Company on November 15?

A) Option A
B) Option B
C) Option C
D) Option D

E) A) and B)
F) None of the above

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Question 63

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In a period of falling prices,the inventory costing method that will cause the company to have the lowest cost of goods sold is

A one-time error in the application of the lower of cost or market (LCM) rule in the current period distorts financial results for the current accounting period

An understatement of the ending inventory balance will cause:

Maxell Company uses the periodic FIFO method to assign costs to inventory and cost of goods sold.Given the following information,what would be reported as the cost of goods sold (COGS) and ending inventory balances for the period?

The inventory costing method that results in the lowest taxable income in a period of inflation is the FIFO method.

The assignment of costs to cost of goods sold and to inventory using the weighted average method usually yields different results depending on whether a perpetual or a periodic system is used.

When the replacement cost of inventory drops below the cost recorded in the financial records,applying the lower of cost or market (LCM) rule causes:

The choice of an inventory costing method usually has no impact on gross profit or cost of goods sold.

Given the following information for Maynor Company in 2014,calculate the company's ending inventory,cost of goods sold,and gross profit,using the following inventory costing methods,assuming the company uses a periodic inventory system: a)Weighted Average. b)FIFO. c)LIFO. d)Specific Identification.(The ending inventory consisted of 15 @ $66;10 @ $70;and 5 @ $76. )

Given the following information for Maynor Company in 2014,calculate the company's ending inventory,cost of goods sold,and gross profit,using the following inventory costing methods,assuming the company uses a periodic inventory system: a)Weighted Average. b)FIFO. c)LIFO. d)Specific Identification.(The ending inventory consisted of 15 @ $66;10 @ $70;and 5 @ $76. )

In applying the lower of cost or market rule to report inventory,"market" is defined as the current selling price.

In each accounting period,a manager can select the inventory costing method that yields the highest net income.

Use the information above to answer the following question.Which of the following statements is true?

Which of the following statements regarding inventory classifications is not true?

Inventory levels increase by 10% at your company during the fourth quarter.Based on this increase,which of the following statements is true?

Generally,which inventory costing method approximates most closely the current cost for each of the following? A.Option A B.Option B C.Option C D.Option D

A company had been selling its product for $20 per unit,but recently lowered the selling price to $15 per unit.The company's current inventory consists of 200 units purchased at $16 per unit.The replacement cost of this merchandise is currently $13 per unit.At what amount should the company's inventory be reported on the balance sheet under the lower of cost or market rule?

Use the information above to answer the following question.If the company uses the LIFO method,what is the cost of its ending inventory?