Chapter 8: Valuation of Inventories: A Cost Based Approach

In a period of rising prices which inventory method generally provides the greatest amount of net income? A) LIFO. B) FIFO. C) Average cost. D) Specific identification.

B) FIFO.

In a period of falling prices, which inventory method generally provides the greatest amount of net income? A) FIFO. B) LIFO. C) Average cost. D) Specific identification.

B) LIFO.

Which of the following methods is also referred as "parking transactions"? A) Consignment sales. B) Sales with buyback agreement. C) Sales on installment. D) Sales with high rates of return.

B) Sales with buyback agreement.

In a period of rising prices, the inventory method which tends to give the highest reported cost of goods sold is A) FIFO. B) average cost. C) LIFO. D) None of these choices are correct.

C) LIFO.

In a period of rising prices, the inventory method which tends to give the highest reported net income is A) base stock. B) weighted-average. C) first-in, first-out. D) last-in, first-out.

C) first-in, first-out.

Which of the following accounts does not exist in a perpetual inventory system? A) Inventory. B) Cost of Goods Sold. C) Sales Returns and Allowances. D)Purchases.

D)Purchases.

Asimov Manufacturing Company has the following account balances at year-end: Office supplies $3,000 Raw materials 21,000 Work-in-process 32,000 Finished goods 46,000 Prepaid insurance 5,000 What amount should Asimov report as inventories in its balance sheet? A) $99,000. B)$78,000. C)$46,000. D)$104,000.

A) $99,000.

Goods on consignment are A) included in the consignor's inventory. B) included in the consignee's revenue. C) included in the consignee's inventory. D) included in both the consignee's and the consignor's inventory.

A) included in the consignor's inventory.

Under a perpetual inventory system which accounts should be debited the each time a sale on account is made? A) Accounts Payable and Purchases. B) Accounts Receivable and Purchases. C) Inventory and Cost of Goods Sold. D) Accounts Receivable and Cost of Goods Sold.

D) Accounts Receivable and Cost of Goods Sold.

Bonita Industries has the following account balances at year end: Office supplies $ 4200 Raw materials 27000 Work-in-process 60000 Finished goods 110000 Prepaid insurance 5700 What amount should Bonita report as inventories in its balance sheet? A) $201200. B)$114200. C)$110000. D)$197000.

D)$197000.