ACCT 301 Smartbook Chapter 8 Inventories Measurement solutions complete answers

ACCT 301 Smartbook Chapter 8 Inventories Measurement solutions complete answers 

 

Items a company intends to sell in the normal course of business, has in production for future sale, or uses currently in production, are all examples of what?

 

The goods a wholesale company purchases in finished form are referred to as what?

 

Inventory for a         company consists of raw materials, work in process, and finished goods. (Enter only one word.)

 

In a perpetual inventory system the inventory account is

 

A periodic inventory system (Select all that apply.)

 

The definition of inventory includes which of the following items? (Select all that apply.)

 

Which inventory system allocates cost of goods available for sale only at the end of each reporting period?

 

What is included in the cost of merchandise inventory? (Select all that apply.)

 

Determining ownership of goods that are in transit at the end of the accounting period is important to

 

Which of the following accounts would be found on the balance sheet of a manufacturing company?

 

What type of expenditures should be included in the cost of inventory of a manufacturing company? (Select all that apply.)

 

In a perpetual inventory system the inventory account is adjusted (Select all that apply.)

 

A(n)        inventory system adjusts inventory at the end of each reporting period. (Enter only one word.)

 

Dollar amounts are assigned to goods sold and goods remaining in ending inventory by making an assumption regarding what?

 

A _____ inventory system recognizes cost of goods sold each time a sale occurs; a _____ inventory system decreases inventory each time a sale occurs.

 

The specific identification method (select all that apply):

 

At the end of an accounting period, it is important to ensure proper inventory _____ to determine the ownership of goods in transit.

 

The average cost method assumes that ending inventory consists of

 

The cost of inventory includes (Select all that apply.)

 

The FIFO method assumes that units sold are the _________ units acquired and that units remaining in ending inventory are the ________ units purchased.

 

The _____ inventory method assumes that the units in ending inventory were the items acquired first.

 

Cost flow        are made to assign dollar amounts to the physical quantities of goods sold and remaining in ending inventory. (Enter only one word.)

 

Assuming that prices rise over time, which inventory cost flow assumption will result in the highest cost of goods sold?

 

The specific identification method of inventory costing matches each unit with

 

If a company uses _____ to measure taxable income, they must use the same method for external financial reporting.

 

Which inventory costing method assumes that cost of goods sold and ending inventory consist of a mixture of all the goods available for sale?

 

The LIFO reserve shows how ending inventory would have differed if the company had utilized _______ or ______, instead of LIFO. (Select all that apply.)

 

Which inventory costing method assumes that items sold are those that were acquired first?

 

Which of the following situations would result in a LIFO liquidation for a company that has 200 units in beginning inventory and sales of 1,000 units?

 

Which inventory costing method assumes that the units sold are the most recent units purchased?

 

Assuming that prices rise over time, which inventory cost flow assumption will result in the lowest pretax income?

 

Joachim Company has 300 units costing $10 per unit in beginning inventory. During the year, the company purchases an additional 1,000 units costing $20 per unit and sells 1,200 units. The company has used the LIFO inventory method for the past 5 years. If the company had purchased 1,200 units, pretax income would have been

 

Turn Company utilizes the LIFO inventory method to calculate taxable income. Which method is available to Turn for financial reporting purposes?

 

High recordkeeping costs and possible LIFO liquidation are disadvantages of

 

Pernell Company reported LIFO reserves of $150,000 and $100,000 in 2016 and 2015, respectively. The company utilized the FIFO assumption for internal purposes. Based on this information, we can conclude that Pernell’s pretax income for the 2016 fiscal year would have been

 

Advantages of using LIFO inventory pools include which of the following? (Select all that apply.)

 

When inventory quantities _____ during a period, out-of-date inventory layers are liquidated and cost of goods sold will match noncurrent costs with current selling prices in a LIFO inventory costing system.

 

A DVL pool is made up of items

 

The LIFO inventory method assumes that the units that remain in ending inventory are

 

Gerhard Company has 300 units costing $10 per unit in beginning inventory. During the year, the company purchases an additional 1,000 units costing $20 per unit and sells 1,200 units. The company has used the LIFO inventory method for the past 5 years. If the company had purchased at least 1,200 units, COGS would have been

 

The layer year cost index is calculated by dividing the cost in ______ year by the cost in ______ year.

 

Which of the following are disadvantages of unit LIFO? (Select all that apply.)

 

Western Company adopted dollar-value LIFO (DVL) as of January 1, 2016, when it had an inventory of $715,000. Its inventory as of December 31, 2016, was $815,400 at year-end costs and the cost index was 1.08. What was DVL inventory on December 31, 2016?

 

Use of LIFO inventory pools reduces the chance of unintentional LIFO layer        . (Enter only one word.)

 

The dollar-value LIFO (DVL) method (Select all that apply.)

 

The dollar-value LIFO method extends the concept of inventory pools by allowing companies to

 

Doris recently started her position at Monro Company. The company uses the dollar-value LIFO inventory method. On her first day at work, Doris was asked to calculate the cost index for a new inventory layer. The company’s records reveal that the cost in terms of the base year was $50,000 and the cost in terms of the layer year was $100,000. What is the cost index for the new layer?

 

Smith Company adopted dollar-value LIFO (DVL) as of January 1, 2016, when it had an inventory of $690,000. Its inventory as of December 31, 2016, was $758,100 at year-end costs and the cost index was 1.05. What was DVL inventory on December 31, 2016?

 

The dollar-value LIFO (DVL) inventory method

 

 

 

A(n)         inventory system adjusts for each change caused by a purchase, a sale, or a return of merchandise. (Enter only one word.)          

Another name for the LIFO reserve account is           

Assuming that prices rise over time, which inventory cost flow assumption will result in the lowest ending inventory?                   

The average cost method assumes that cost of goods sold consists of           

A _____ company resells goods while a _____ company produces goods.          

The LIFO inventory method assumes that the units sold are              

LIFO inventory pools             

A LIFO liquidation occurs when inventory quantities ______.               

Orange Co., a computer retailer, shows the following selected assets on its balance sheet. Indicate which account would be properly classified as inventory.                 

A periodic inventory system allocates cost of goods available for sale _____; a perpetual inventory system allocates cost of goods available for sale _____.            

Pernell Company reported LIFO reserves of $150,000 and $100,000 in 2016 and 2015, respectively. The company utilized the FIFO assumption for internal purposes. Based on this information, we can conclude that at the end of 2016, Pernell’s ending inventory would have been                 

Pernell Company reported LIFO reserves of $150,000 and $100,000 in 2016 and 2015, respectively. The company utilized the FIFO assumption for internal purposes. Based on this information, we can conclude that Pernell’s cost of goods sold for the 2016 fiscal year would have been             

Select all that apply

Inventory cost flow assumptions can be used to assign dollar amounts to (Select all that apply.)                  

True or false: A periodic inventory system allows management to determine the amount of goods on hand without having to take a physical count.                   

True or false: Dollar-value LIFO allows a company to combine a large variety of goods into one pool.            

What method of inventory valuation matches each unit on hand at the end of the period with its actual cost?           

Which inventory costing method assumes that items in ending inventory are the most recently acquired?                

Which inventory costing method matches each unit sold with its actual cost?            

 

 

The amount of cost of goods sold determined under the average cost method typically                   

Finished goods is a type of inventory found on a _____ company’s balance sheet.                 

Items held for sale in the normal course of business are referred to as           

Many companies maintain their internal records using _____ or the average cost method, but use ______ for external reporting and income tax purposes.              

A periodic inventory system (Select all that apply.)                

Ruy Company typically tries to sell its oldest inventory items first. Ruy Company                  

Suppose that Michale Company operates in an environment of rising prices and utilizes the periodic inventory system. If the company were to use the LIFO inventory method, its cost of goods would be $500,000; if it were to use the FIFO method, its cost of goods sold would be $400,000. Based on this information, which of the following predictions would be correct with respect to the weighted-average cost method?            

True or false: The impact on reported income numbers is an important consideration when choosing an inventory cost flow method.                 

What is required at the end of a reporting period in a periodic inventory system?                

What is the first step in measuring inventory and cost of goods sold?           

What of the following could motivate a company that uses LIFO for external reporting to use another method for internal recordkeeping? (Select all that apply.)            

When prices increase, the ______ inventory method provides the best matching of revenue and expenses.                 

Which factors may influence a company’s choice of inventory cost flow assumption? (Select all that apply.)               

Which of the following accounts are typically reported on the balance sheet of a manufacturing company? (Select all that apply.)               

Which of the following is correct?                 

 

 

Beginning Inventory + purchases-Ending Inventory+COGS                

buyer is responsible for shipping, insurance, ect. Title passes to buyer at the time of shipment?                   

calculated at the end of the period               

Can be recorded under gross method and net method(2/10 n/30)                

combine a large variety of goods into one pool

A _____ company resells goods while a _____ company produces goods.          

The cost of inventory includes?          

The definition of inventory includes which of the following items?                

Dollar Value LIFO method of simplifying LIFO            

EI on the balance sheet with LIFO are generally out of date

Because they reflect old purchase transactions

Factors influencing method choice                

FIFO for NI and LIFO for income taxes           

The FIFO method assumes that units sold are the _________ units acquired and that units remaining in ending inventory are the ________ units purchased.                  

Freight in on purchases +inventory               

generally, ending and COGS will be different under perpetual and periodic systems

The gross profit ratio is computed as _____ divided by net sales.                   

If a company uses LIFO to measure its taxable income, the IRS requires that LIFO also be used to measure income reported to investors and creditors.This is know as the          

included in consignors’ inventory                 

included in ending inventory amount of sales you believe will be returned               

inventory and COGS are continuously updated for each purchase, sale, or return                 

Inventory Cost Flow Assumptions                 

IRS regs require that if a company LIFO to compute taxable income, they must also use it for external financial reporting                 

know inventory and COGS at all times without a physical count                   

mainly inventory in a finished state (FG INV)             

Merchandise purchases, purchase returns, purchase discounts, and freight-in are recorded in temporary accts.           

moving average unit cost that is recalculated every time a purchase is made             

Net purchases gets closed into inventory                 

a physical count of ending inventory must be made              

Purchases returns for perpetual?                  

regarding this whole section for inventory cost flow assumptions                 

seller is responsible for the shipping, insurance, ect. Title passes to buyer at delivery             

simplifies record keeping by grouping inventory units into pools based on physical similarities          

The specific identification method of inventory costing matches each unit with          

Which inventory system allocates cost of goods available for sale only at the end of each reporting period?             

 

 

Adams Company utilizes LIFO inventory pools. Current period beginning inventory cost was $5,500. At the end of the period, the company determines that a layer of 100 units has been added. Average current year purchase price per unit was $6.00; the most recent cost per unit was $6.50. The amount of ending inventory should be                  

A(n) _____ inventory pool groups items based on physical similarities.            

If prices have changed and a company uses dollar-value LIFO, we need to determine whether an observed increase in inventory is an actual increase in the quantity of inventory or one caused by an increase in prices. This is accomplished by using           

A LIFO inventory pool consists of inventory grouped according to _____.                  

Under the DVL approach, cost indexes are used to determine whether          

Under the DVL method, a layer may only be added during the current year if inventory at base-year cost has ______.                   

When a LIFO inventory pool is used and the quantity of ending inventory increases, ending inventory will consist of beginning inventory plus                  

When the DVL method is used, a LIFO layer is added when              

Within LIFO inventory pools, all purchases during the period are considered to be made at the same        and the same        .              

Within LIFO inventory pools, all purchases during the period are considered to be made (Select all that apply.)