Quiz 1 Midterm Inventories
Quiz 1 Midterm Inventories
1.
b. last-in, first-out
c. first-in, first-out
d. average cost
5. The inventory method that assigns the most recent costs to cost of goods
sold is
a. FIFO
b. LIFO
c. average
d. specific identification
6. Inventory costing methods place primary emphasis on assumptions about
a. flow of goods
b. flow of costs
c. flow of goods or flow of costs depending on the method
d. neither flow or goods or flow of costs
7. Under the _________ inventory method, accounting records maintain a
continuously updated
inventory value.
a. retail
b. periodic
c. physical
d. perpetual
8. Under a periodic inventory system
a. accounting records continuously disclose the amount of inventory
b. a separate account for each type of merchandise is maintained in a
subsidiary ledger
c. a physical inventory is taken at the end of the period
d. merchandise inventory is debited when goods are returned to vendors
The following lots of a particular commodity were available for sale during the
year:
Beginning inventory
10 units at P55
First purchase
25 units at P65
Second purchase
30 units at P68
Third purchase
15 units at P70
The firm uses the periodic system and there are 25 units of the commodity on
hand at the end of the year.
9. What is the amount of the inventory at the end of the year using the FIFO
method?
a. P1,645
b. P1,525
c. P1,730
d. P3,535
10. What is the amount of the inventory at the end of the year using the
average cost method?
a. P1,645
b. P1,525
c. P1,730
d. P3,620
11.If merchandise inventory is being valued at cost and the price level is
steadily rising, the method of costing that will yield the highest net income is
a. periodic
b. LIFO
c. FIFO
d. average
12.If merchandise inventory is being valued at cost and the purchase price is
steadily falling, which
method of costing will yield the largest net income?
a. average cost
b. LIFO
c. FIFO
d. weighted average
13. If the revenues are correctly reported and the Gross Profit of a company
is understated, what is the effect on Owners Equity?
a. Understated
b. Overstated
c. Correctly Stated
d. None of the above
14.If a manufacturer ships merchandise to a retailer on consignment, the
unsold merchandise should be included in the inventory of the
a. consignee
b. retailer
c. manufacturer
d. shipper
15. Damaged merchandise that can be sold only at prices below cost should
be valued at
a. net realizable value
b. LIFO
c. FIFO
d. average
Problems:
1. The following units of a particular item were available for sale during the
year:
Beginning inventory 150 units @ P755
Sale 120 units @ P925
First purchase 400 units @ P785
Sale 200 units @ P925
Second purchase 300 units @ P805
Sale 290 units @ P925
The firm uses the perpetual inventory system and there are 240 units of
the item on hand at the end of the year. What is the total cost of ending
inventory according to FIFO?
The three identical units of Product Basic H are purchased during July, as shown
below.
Date
Product Basic H
Units
Cost
July 3
Purchase
1
P35
July 10
Purchase
1
P36
July 24
Purchase
1
P37
Total
3
P108
Average cost per unit P36
Assume one unit sells on July 28 for $45.
Determine the gross profit, cost of merchandise sold, and ending
inventory on July 31 using (2) first in first out, (3) last in last out, (4)
average cost flow methods.
The following information was extracted from the Stone Companys
records. (11pts.)
Gross Sales P232,566
Gross Profit P87,990
Sales Discounts P1,125 (= 1/2 % of Net Sales)
Total Operating Expenses P88, 440
Selling Expenses P33, 560
12-15
Good Luck!!