ACC 201 Chp 7 LS
If Barry Bees, Inc.'s days to sell equals 73 days based on a 365-day year, then its inventory turnover ratio equals _____ times
5
Iris, Inc. uses FIFO for financial reporting purposes and LIFO for its income tax return. Iris' accounting treatment of its inventory is ______
Not in accordance with the LIFO conformity rule
Goods in transit that have terms OFB destination should be included in the ______ inventory
Seller's
Which inventory method is typically used when accounting for expensive and unique inventory items?
Specific identification
Which statement is true?
Specific identification, weighted average cost, LIFO and FIFO are acceptable GAAP costing methods
Using a perpetual inventory system, when a company records a sale of merchandise, it must also record _____
1. A decrease in tis inventory 2. Cost of goods sold, which will be reported on the income statement
The assumption that a company makes about its inventory cost flow has _____
1. An effect on the company's balance sheet 2. An effect on the company's income statement
Which of these would explain an increase in a company's inventory turnover ratio?
1. An increase in the demand for the company's products 2. A decrease in total inventory
Which financial statements are needed to calculate the inventory turnover ratio?
1. Balance sheet 2. Income statement
To ensure the accuracy of inventory accounted for using a perpetual system, physical counts ______
1. Detect bookkeeping errors 2. Detect theft 3. Detect shrinkage
Gross profit is _____
1. Equal to net sales minus cost of goods sold 2. A subtotal on the income statement
Gross profit is ______
1. Equal to net sales minus cost of goods sold 2. A subtotal on the income statement
Assuming rising inventory prices, rank which inventory method results in the higher ending inventory values. List from top to bottom, in order of highest ending inventory to lowest ending inventory value
1. FIFO 2. Weighted average 3. LIFO
Which of the following income statement line items are affected by the inventory method chosen?
1. Income tax expense 2. Net income 3. Gross profit 4. Income from operations 5. Income before income tax expense
If cost of acquiring inventory is rising, LIFO will result in which of the following compared to FIFO?
1. Income tax expenses will be lower 2. Cost of goods sold will be higher 3. Gross profit will be lower
Which inventory costing methods are based on assumptions that accountants make about the flow fo inventory costs?
1. LIFO 2. FIFO
What inventory accounts would one expect to see in the accounting records of a company that makes furniture?
1. Raw materials inventory 2. Finished goods inventory 3. Works in process inventory
What may cause inventory turnover ratios to vary significantly between companies in the same industry?
1. Some companies may sell fewer higher-cost goods 2. Some companies may sell more lower-cost goods
Rank in order, from highest to lowest, the anticipated inventory turnover ratios for the following companies
1. Walmart 2. Tiffany & Co 3. Bath Iron Works
Which of these will require a credit to the inventory account in a perpetual inventory system>
1.Selling inventory on account 2. Selling inventory for cash
On May 1, beginning inventory consists of 10 items at a cost of $10 each. On May 3, 10 items are purchased at $12 each. On May 8, 12 items are sold. On May 15, 10 items are purchases at $14 each. Using perpetual FIFO, the cost of Goods sold for the month ended May 31 equals _____
$124
Alpha company bought 75 units of inventory for $4 each and 25 units of inventory for $5 each. Alpha's weighted average cost per unit is ______
$4.25
Acme, Inc. had cost of goods sold of $2,000. If beginning inventory was $2,100 and ending inventory was $500, Acme's purchases must have been $______.
$400
______ Inventory refers to goods a company is holding on behalf of the actual owner of the goods. The company is willing to try to sell the goods for the owner for a fee
Consignment
In a perpetual inventory system, inventory is initially recorded at _____
Cost
Days to sell measures the average number of ______
Days from the time inventory is purchases to the time it is sold
An increase in a company's inventory balance from a prior year is ______
Good if the inventory turnover ratio is higher
As inventory quality increases, its cost usually _____
Increases
FIFO uses the _____ cost for Cost of Goods Sold on the income statement and the _____ cost for inventory on the balance sheet
oldest;newest
On May 1, beginning inventory consists of 10 items at a cost of $10 each. On May 3, 10 items are purchased at $12 each. On May 8, 12 items are sold. On May 15, 10 items are purchases at $14 each. Using perpetual LIFO, ending inventory at May 31 equals ______
$220
Of the 4 companies listed below, which company is more likely to use specific identification to value its inventory and cost of goods sold?
Custom home builder
Assuming sales remain unchanged, if cost of goods sold increases then gross profit ______
Decreases
A ______ inventory turnover ratio may result in a reduction in storage and obsolescence costs as well as reduced borrowing
Higher
Which of the following statements concerning inventory is correct?
Inventory is reported as a current asset because it will be converted into cash within a year of the balance sheet data
If a company assumes that its inventory costs flow out in the opposite order from which the goods were purchased, it uses _____ to value its inventory
LIFO
Acme Company's balance sheet shows three inventory accounts—raw materials, work in process, and finished goods. Acme Company must be a ______
Manufacturer
Cost of goods sold is debited and inventory credited, when the sale occurs using the ______ inventory system
Perpetual
Which of the following would be considered merchandise inventory?
Purchased finished goods
______ inventory will enter the production process and become ______ inventory. Once complete, the goods will become ______ inventory
Raw materials; work in process; finished goods