accounting-chapter 6

At May 1, 2017, Blossom Company had beginning inventory consisting of 350 units with a unit cost of $8.0. During May, the company purchased inventory as follows: ▪ 710 units at $8.0 ▪ 1060 units at $9.0 The company sold 1770 units during the month for $14.0 per unit. Blossom uses the average cost method. The average cost per unit for May is.. $8.50. $9. $8.60. $8.

$8.50

Tidwell Company's goods in transit at December 31 include sales made (1) FOB destination (2) FOB shipping point and purchases made (3) FOB destination (4) FOB shipping point. Which items should be included in Tidwell's inventory at December 31? (1) and (4) (2) and (3) (2) and (4) (1) and (3)

(1) and (4)

Which of the following statements is true regarding inventory cost flow assumptions? A company must comply with the method specified by industry standards. A company may never change its inventory costing method once it has chosen a method. A company may use more than one costing method concurrently. A company must use the same method for domestic and foreign operations.

A company may use more than one costing method concurrently.

Which one of the following statements is true? A manufacturing company will normally have raw materials, work in process, and merchandise inventory as inventory account classifications. A merchandising company will normally have raw materials and merchandise inventory as inventory account classifications. A manufacturing company will normally have raw materials, work in process, and finished goods as inventory account classifications. A merchandising company will normally have raw materials, work in process, and finished goods as inventory account classifications.

A manufacturing company will normally have raw materials, work in process, and finished goods as inventory account classifications.

Cecil gives goods on consignment to Jerry who agrees to try to sell them for a 25% commission. At the end of the accounting period, which of the following parties includes in its inventory the consigned goods? Cecil Jerry Both Cecil and Jerry Neither Cecil nor Jerry

Cecil

In a period of rising prices which inventory method will result in the greatest amount of income tax expense? LIFO Specific identification FIFO Average cost

FIFO

In a period of declining prices, which of the following inventory methods generally results in the lowest balance sheet figure for inventory? FIFO method Average cost method Need more information to answer LIFO method

FIFO Method

In a period of falling prices, which of the following methods will give the largest net income? Average-cost FIFO LIFO Specific identification

LIFO

Two companies report the same cost of goods available for sale, but each employs a different inventory costing method. If the price of goods has increased during the period, which statement is true? The company using FIFO will have the highest ending inventory. The company using LIFO will have the lowest cost of goods sold. The company using LIFO will have the highest ending inventory. The company using FIFO will have the highest cost of good sold

The company using FIFO will have the highest ending inventory.

Which of the following statements is correct with respect to inventories? FIFO seldom coincides with the actual physical flow of inventory. The FIFO method assumes that the costs of the earliest goods acquired are the last to be sold. It is generally good business management to sell the most recently acquired goods first. Under FIFO, the ending inventory is based on the latest units purchased.

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

Which of the following statements is correct with respect to inventories? FIFO seldom coincides with the actual physical flow of inventory. The FIFO method assumes that the costs of the earliest goods acquired are the last to be sold. It is generally good business management to sell the most recently acquired goods first. Under FIFO, the ending inventory is based on the latest units purchased.

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

Which of the following items will increase inventoriable costs for the buyer of goods? purchase discounts taken by the purchaser freight charges paid by the seller purchase returns and allowances granted by the seller freight charges paid by the purchaser

freight charges paid by the purchaser

Which of the following items will increase inventoriable costs for the buyer of goods? purchase discounts taken by the purchaser freight charges paid by the seller purchase returns and allowances granted by the seller freight charges paid by the purchaser

freight charges paid by the purchaser

The accounting principle that requires that the cost flow assumption be consistent with the physical movement of goods is called the matching principle. nonexistent; that is, there is no such accounting requirement. called the physical flow assumption. called the consistency principle.

nonexistent; that is, there is no such accounting requirement.

The accounting principle that requires that the cost flow assumption be consistent with the physical movement of goods is called the matching principle. nonexistent; that is, there is no such accounting requirement. called the physical flow assumption. called the consistency principle.

nonexistent; that is, there is no such accounting requirement.

The LIFO inventory method assumes that the cost of the latest units purchased are the last to be allocated to cost of goods sold. not allocated to cost of goods sold or ending inventory. the first to be allocated to cost of goods sold. the first to be allocated to ending inventory.

the first to be allocated to cost of goods sold.

The LIFO inventory method assumes that the cost of the latest units purchased are -the last to be allocated to cost of goods sold. -not allocated to cost of goods sold or ending inventory. -the first to be allocated to cost of goods sold. -the first to be allocated to ending inventory.

the first to be allocated to cost of goods sold.

LIFO can be used under GAAP but not IFRS. under neither GAAP nor IFRS. under both GAAP and IFRS. under IFRS but not GAAP

under GAAP but not IFRS