fan. acc.

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

LIFO

In a LIFO inventory system, inventory costs shown in the balance sheet may be distorted because they may represent costs Multiple choice question. that have not yet been incurred. incurred several years earlier. incurred solely on the balance sheet date.

incurred several years earlier.

Select all that apply The specific identification method (select all that apply): Multiple select question. is not an acceptable method of accounting would be beneficial to a company that makes fine jewelry matches each unit of inventory with its actual cost would be beneficial to a company that makes inexpensive products with high sales volume

would be beneficial to a company that makes fine jewelry matches each unit of inventory with its actual cost

What type of company purchases raw materials and makes goods to sell? Multiple choice question. Manufacturers Wholesalers Retailers

Manufacturers

Gross Profit is Multiple choice question. Revenue minus Expenses. Net Sales Revenue minus Cost of Goods Sold. Beginning Inventory plus Purchases minus Ending Inventory. Revenue minus Inventory.

Net Sales Revenue minus Cost of Goods Sold.

In times of rising prices, cost of goods sold determined using the LIFO inventory assumption typically will be____than cost of goods sold determined using the FIFO inventory assumption.

higher

The inventory costing method that matches each unit of inventory with its actual cost is referred to as the _____ method. Multiple choice question. weighted-average matching unit actual cost specific identification

specific identification

Where is inventory reported in the financial statements? Multiple choice question. Income statement as revenue Statement of cash flows as an investing activity Balance sheet as a current asset Balance sheet as a noncurrent asset

Balance sheet as a current asset

Where is inventory reported in the financial statements? Multiple choice question. Statement of cash flows as an investing activity Balance sheet as a current asset Income statement as revenue Balance sheet as a noncurrent asset

Balance sheet as a current asset

The _____ inventory cost flow assumption typically approximates the actual physical flow of inventory items of most companies.

Blank 1: FIFO or first-in-first-out

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

Blank 1: inventory

In times of rising prices, ending inventory determined using the LIFO inventory assumption will be ____ than ending inventory determined using the FIFO inventory assumption.

Blank 1: lower, smaller, or less

Companies that produce the inventory they sell are referred to as __

Blank 1: manufacturers or manufacturing

The ____ inventory system records all inventory-related transactions in the Inventory account (e.g. transportation, purchase returns and allowances, purchase discounts) and reduces inventory at the time of sale. The _____ inventory system uses separate accounts for these items and records cost of goods sold at the end of the accounting period.

Blank 1: perpetual Blank 2: periodic

Because prices change over time, costs reported for these accounts tend to differ among inventory cost methods. Multiple select question. Sales Revenue Cost of Goods Sold Purchases Inventory

Cost of Goods Sold Inventory

Margot Inc, which uses the perpetual inventory system, purchases 500 units of inventory to be held for resale. Margot should debit the purchase to: Multiple choice question. Purchases Inventory Raw Materials Cost of Goods Sold

Inventory

Select all that apply The definition of inventory includes which of the following items? Multiple select question. Items held for use or disposal Items used currently in the production of goods to be sold Items currently in production for future sale Items held for resale

Items used currently in the production of goods to be sold Items currently in production for future sale Items held for resale

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

LIFO

The cumulative difference between reporting inventory at LIFO rather than FIFO is commonly referred to as the

LIFO reserve

In a perpetual inventory system, when a company sells inventory on account, how many entries are required?

Two

Inventory is classified as Multiple choice question. a current liability. a current asset. a noncurrent asset. a revenue.

a current asset.

Select all that apply Major differences between service companies and retail or manufacturing companies is that retailers and manufacturers must account for (Select all that apply.) Multiple select question. current assets. cost of goods sold. liabilities. inventory.

cost of goods sold. inventory.

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

fifo

Norma Inc. uses the perpetual inventory system. When the company records a sale, it should make entries to: Multiple select question. decrease an asset and decrease revenue increase an asset and decrease an expense increase an asset and increase revenue decrease an asset and increase an expense

increase an asset and increase revenue decrease an asset and increase an expense

Select all that apply Purchasing inventory on account: Multiple select question. decreases assets increases equity increases liabilities decreases equity increases assets

increases liabilities increases assets

The ______ method of valuing inventory was developed to avoid reporting inventory at an amount that is ______ than the benefits it can provide.

lower of cost and net realizable value; greater

Which inventory cost flow method approximates the physical flow of inventory items?

FIFO

Freight-in costs are debited to Inventory in this inventory system:

perpetual only