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Exam 6: Merchandise Inventory

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Question 31

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The specific identification method of inventory costing is required to be used by businesses that sell unique,easily identified inventory items.

A) True
B) False

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Question 32

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State the accounting term that applies to each of the following definitions. $\begin{array} { | l | l | } \hline \text { Definition } & \text { Accounting Term } \\\hline \text { Principle that states significant items } & \\\text { must conform to GAAP. } & \\\hline \text { Treats the most recent/newest } & \\\text { purchases as the first units sold. } & \\\hline \text { Requires that a company report } & \\\text { enough information for outsiders to } & \\\text { make knowledgeable decisions. } & \\\hline \text { Identifies exactly which inventory } & \\\text { item was sold. Usually used for } & \\\text { higher cost inventory. } & \\\hline\end{array}$

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\[\begin{array} { | l | l | }
\hline\te...

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Question 33

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The materiality concept states that a company must ________.

When using the weighted-average inventory costing method in a perpetual inventory system,a new weighted average cost per unit is computed at the end of each quarter.

Which of the following inventory costing methods uses the cost of the oldest purchases to compute the cost of goods sold?

In a period of rising costs,the first-in,first-out (FIFO)method results in a lower cost of goods sold and a higher gross profit than the last-in,first-out (LIFO)method.

Which of the following is NOT an inventory costing method?

Which of the following principles states that a business should not report anticipated gains?

Weighted average cost per unit is determined by dividing the cost of goods available for sale by the number of units available.

Which of the following values is considered the market value when valuing inventory at lower-of-cost-or-market under U.S.GAAP?

Which of the following statements regarding FIFO is incorrect?

Camping Gear Company had 500 units of inventory on hand at the end of the year.These were recorded at a cost of $14 each using the last-in,first-out (LIFO) method.The current replacement cost is $10 per unit.The selling price charged by Camping Gear Company for each finished product is $17.As a result of recording the adjusting entry as per the lower-of-cost-or-market rule,the gross profit will ________.

The Bridal Gift Shop Company has 12 units in ending merchandise inventory on December 31.The units were purchased in November for $150 each.The price lists from suppliers indicate the current replacement cost of the item to be $152 each.What would be the amount reported as Merchandise Inventory on the balance sheet?

Which of the following principles states that a business's financial statements must report enough information for outsiders to make knowledgeable decisions about the company?

When a company uses the perpetual inventory method,which of the following would be the entry to adjust inventory to lower-of-cost-or-market?

Which of the following inventory costing methods is based on the actual cost of each particular unit of inventory?

Ralwins Company had the following balances and transactions during 2018,from January 1 to December 31: $\begin{array} { | l | l | } \hline \text { Beginning Merchandise Inventory } & 200 \text { units at } \$ 83 \\\hline \text { March } 10 & \text { Sold } 100 \text { units } \\\hline & \text { Purchased } 600 \text { units at } \\\text { June } 10 & \$ 86 \\\hline \text { October 30 } & \text { Sold } 300 \text { units } \\\hline\end{array}$ What would be reported for ending Merchandise Inventory on the balance sheet at December 31,2018 if the perpetual inventory system and the weighted-average inventory costing method are used? (Round unit costs to two decimal places and total costs to nearest dollar.)

Which of the following inventory costing methods yields the highest cost of goods sold during a period of rising inventory costs?

The Merchandise Inventory account is debited to write down the inventory as required by the lower-of-cost-or-market rule.

The Organizer Store uses the weighted-average inventory costing method in a perpetual inventory system.The unit cost of the beginning inventory for inventory item X500 was $10 per unit.There was one unit in beginning inventory.The first purchase of the period has a unit cost of $12 per unit.Multiple units were purchased.The weighted average cost per unit is $11.