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Exam 7: Inventories

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Question 31

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Which of the following measures the relationship between cost of merchandise sold and the amount of inventory carried during the period?

A) inventory turnover
B) fixed asset turnover
C) retail method of inventory costing
D) gross profit method of inventory costing

E) B) and D)
F) All of the above

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Question 32

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a. Explain the effect of the following on the financial statements:​Goods held on consignment were included in the ending inventory count.​Goods purchased FOB shipping point were in transit on the last day of the year.These goods were not counted as part of ending inventory.​Goods sold FOB shipping point were in transit on the last day of the year.These goods were not counted as part of ending inventory.​​ b. What happens if inventory errors are not found and corrected?

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a.Goods held on consignment were include...

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Question 33

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Average inventory is computed by adding the inventory at the beginning of the period to the inventory at the end of the period and dividing by 2.

The inventory costing method that reports the most current prices in ending inventory is

The method of estimating inventory that uses records of the selling prices of the merchandise is called the

Use the information below to answer the following questions. ​ The following units of an inventory item were available for sale during the year: The firm uses the periodic inventory system. During the year, 60 units of the item were sold. ​ -The value of ending inventory rounded to the nearest dollar using average cost is

Safeguarding inventory and proper reporting of the inventory in the financial statements are the reasons for controlling the inventory.

Stevens Company started the year with an inventory cost of $145,000.During the month of January,Stevens purchased inventory that cost $53,000.January sales totaled $140,000.Estimated gross profit is 35%.The estimated ending inventory as of January 31 is

In the retail inventory method,the cost to retail ratio is equal to the cost of merchandise sold divided by the retail price of the merchandise sold.

Taking a physical count of inventory

Which of the following is not an example of safeguarding inventory?

Beginning inventory,purchases,and sales data for tennis rackets are as follows:​ Complete the inventory cost card assuming the business maintains a perpetual inventory system and calculates the cost of merchandise sold and ending inventory using FIFO.​

If ending inventory for the year is overstated,owner's equity reported on the balance sheet at the end of the year is understated.

A company will most likely use an estimated method of determining inventory when

The lower of cost or market is a method of inventory valuation.

Match each situation to its impact (a-c) on the current year's net income. -Merchandise that was sold and shipped FOB destination on the last day of the year was not included in the seller's ending inventory.

If the cost of an item of inventory is $60 and the current replacement cost is $75,the amount included in inventory according to the lower of cost or market is

All of the following are documents used for inventory control except a

Use the information below to answer the following questions. Boxwood Company sells blankets for $60 each. The following was taken from the inventory records during May. The company had no beginning inventory on May 1. ​ ​ -Assuming that the company uses the perpetual inventory system,determine the cost of merchandise sold for the sale of May 20 using the LIFO inventory cost method.

On the basis of the following data,determine the estimated cost of the inventory as of March 31 by the retail method,presenting details of the computation in good order.