Câu hỏi 

1
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Too much inventory on hand

Select one:
a. increases the cost to safeguard the assets
b. ties up funds that could be used to improve operations
c. All of these choices
d. increases the losses due to price declines

Câu hỏi 2
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If a company values inventory at the lower of cost or market, which of the following is the value of
merchandise inventory on the balance sheet? Apply the lower-of-cost-or-market method to inventory as a
whole.

Item Inventory Quantity Unit Cost Price Unit Market Price

Product C 420 $6 $  5

Product D 370  12  14

Select one:
a. $7,280
b. $7,700
c. $6,960
d. $6,540
Câu hỏi 3
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Match each description to the appropriate inventory system (a or b).

Answer 1
This system can be costly and time consuming if not computerized. Perpetual

Answer 2
Under this system, only revenue is recorded when sales are made. Periodic

Answer 3
Average cost is rarely used with this system. Perpetual

When using this system, a physical inventory is necessary to determine cost of Answer 4
merchandise sold. Periodic

Câu hỏi 4
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A sales invoice included the following information: merchandise price, $12,000; terms 1/10, n/eom, FOB
shipping point with prepaid freight of $900 added to the invoice.  Assuming that a credit for merchandise
returned of $500 is granted prior to payment and the invoice is paid within the discount period, what is
the amount of cash that should be received by the seller?

Select one:
a. $12,285
b. $11,385
c. $11,500
d. $10,480

Câu hỏi 5
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Addison, Inc. uses a perpetual inventory system.  The following is information about one inventory item
for the month of September:

Sept.  1 Inventory 20 units at $20

         4 Sale 10 units
       10 Purchase 30 units at $25
       17 Sale 20 units
       30 Purchase 10 units at $30

Use the information for Addison, Inc. If Addison uses LIFO, the cost of the ending merchandise
inventory on September 30 is

Select one:
a. $750
b. $700
c. $650
d. $800

Câu hỏi 6
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Determine the total value of the merchandise using net realizable value.

Item Quantity Selling Price Commission

Doll 10 $7 $2

Horse 5   9   3

Select one:
a. $35
b. $115
c. $80
d. $25

Câu hỏi 7
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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

Select one:
a. $69,300
b. $91,000
c. $107,000
d. $58,000

Câu hỏi 8
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During a period of consistently rising prices, the method of inventory that will result in reporting the
greatest cost of merchandise sold is

Select one:
a. average cost
b. FIFO
c. LIFO
d. weighted average

Câu hỏi 9
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A company will most likely use an estimated method of determining inventory when

Select one:
a. the company decides not to do a physical inventory
b. the company has not kept up with its inventory records
c. a natural disaster has destroyed most of the inventory
d. the company is preparing annual financial statements

Câu hỏi 10
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If title to merchandise purchases passes to the buyer when the goods are shipped from the seller, the terms
are

Select one:
a. n/30
b. FOB shipping point
c. consigned
d. FOB destination
âu hỏi 11
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During times of rising prices, which of the following is not an accurate statement?

Select one:
a. Average costing will yield results that are between those of FIFO and LIFO.
b. LIFO will result in a higher cost of merchandise sold than FIFO.
c. LIFO will result in higher income taxes than FIFO.
d. FIFO will result in a higher net income than LIFO.

Câu hỏi 12
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If the physical count of inventory revealed $158,000 of merchandise on hand and the inventory records
reported $163,000, what would be the necessary adjusting entry to record inventory shrinkage?

Select one:
a. debit Merchandise Inventory, $158,000; credit Cost of Merchandise Sold, $158,000
b. debit Merchandise Inventory, $5,000; credit Cost of Merchandise Sold, $5,000
c. debit Cost of Merchandise Sold, $163,000; credit Merchandise Inventory, $158,000
d. debit Cost of Merchandise Sold, $5,000; credit Merchandise Inventory, $5,000

Câu hỏi 13
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A company using the periodic inventory system has merchandise inventory costing $210 on hand at the
beginning of a period.  During the period, merchandise costing $635 is purchased.  At year-end,
merchandise inventory costing $160 is on hand.  The cost of merchandise sold for the year is

Select one:
a. $265
b. $795
c. $685
d. $635

Câu hỏi 14
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Kristin's Boutique has identified the following items for possible inclusion in its December 31
inventory.  Which of the following would not be included in the year-end inventory?

Select one:
a. Kristin's has sent merchandise to various retailers on a consignment basis.
b. Kristin's has in its warehouse merchandise on consignment from Abby Co.
c. Merchandise purchased FOB shipping point was picked up by the freight company but had still not
arrived at Kristin's Boutique as of December 31.
d. Kristin's has merchandise on hand that has been returned by customers because of wrong size.  

Câu hỏi 15
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During the taking of its physical inventory on December 31, Barry's Bike Shop incorrectly counted its
inventory as $350,000 instead of the correct amount of $280,000. The effect on the balance sheet and
income statement would be

Select one:
a. assets, retained earnings, and net income all overstated by $70,000
b. assets and retained earnings overstated by $70,000 and net income understated by $70,000
c. assets overstated by $70,000; retained earnings understated by $70,000; and no effect on the income
statement
d. assets overstated by $70,000; retained earnings understated by $70,000; and net income statement
understated by $70,000

Câu hỏi 16
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If a manufacturer ships merchandise to a retailer on consignment, the unsold merchandise should be
included in the inventory of the

Select one:
a. manufacturer
b. shipper
c. retailer
d. consignee

Câu hỏi 17
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Match each description to the appropriate cost flow assumption (a-d).

Cost flow is assumed to be in the reverse order of costs Answer 1

incurred. Last-in, first-out (LIFO)

The cost of the units sold and in ending inventory is a weighted Answer 2
average of the purchase costs. Weighted average

Answer 3
Cost flow matches the unit sold to the unit purchased. Specific identification

Answer 4
Cost flow is in the order in which the costs were incurred. First-in, first-out (FIFO)

Câu hỏi 18
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During a period of falling prices, which of the following inventory methods generally results in the lowest
balance sheet amount for inventory?

Select one:
a. cannot tell without more information
b. LIFO method
c. FIFO method
d. average cost method

Câu hỏi 19
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If a company mistakenly counts less items during a physical inventory than actually exist, how will the
error affect the cost of merchandise sold?

Select one:
a. understated
b. only inventory will be affected
c. no change
d. overstated

Câu hỏi 20
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If the revenues are correctly reported and the gross profit of a company is understated, what is the effect
on owner's equity?

Select one:
a. correctly stated
b. overstated
c. understated
d. None of these choices

Câu hỏi 21
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Addison, Inc. uses a perpetual inventory system.  The following is information about one inventory item
for the month of September:

Sept.  1 Inventory 20 units at $20

         4 Sale 10 units
       10 Purchase 30 units at $25
       17 Sale 20 units
       30 Purchase 10 units at $30

Use the information for Addison, Inc. If Addison uses LIFO, the cost of the ending merchandise
inventory on September 30 is

Select one:
a. $750
b. $700
c. $650
d. $800

Câu hỏi 22
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Excess inventory results in all of the following except

Select one:
a. increased storage expense
b. lost sales
c. increased risk of loss due to damage
d. tied-up funds that could be used to improve operations

Câu hỏi 23
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Under a perpetual inventory system, the amount of each type of merchandise on hand is available in the

Select one:
a. inventory ledger
b. creditor's ledger
c. customer's ledger
d. purchase ledger

Câu hỏi 24
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In recording the cost of merchandise sold for cash, based on data available from perpetual inventory
records, the journal entry is a

Select one:
a. debit to Cost of Merchandise Sold and a credit to Sales
b. debit to Accounts Receivable and a credit to Merchandise Inventory
c. debit to Merchandise Inventory and a credit to Cost of Merchandise Sold
d. debit to Cost of Merchandise Sold and a credit to Merchandise Inventory

Câu hỏi 25
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Match each situation to its impact (a-c) on the current year's net income.

Answer 1
Beginning inventory was understated. Net income for the current year w ill be overstated.

The beginning inventory was recorded as Answer 2

$10,000, when actual inventory on hand Net income for the current year w ill be overstated.
was $12,000.
Merchandise that was sold and shipped
FOB destination on the last day of the Answer 3
year was not included in the seller's There w ill be no error effect on net income.
ending inventory.
Purchased merchandise was shipped FOB
shipping point on the last day of the Answer 4
year.  The cost of the merchandise was not Net income for the current year w ill be understated.
included in ending inventory.
A consignor included merchandise in the Answer 5
hands of the consignee in ending There w ill be no error effect on net income.
inventory.
Merchandise was purchased FOB
destination on the last day of the Answer 6
year.  The cost of the merchandise There w ill be no error effect on net income.
purchased was not included in ending
inventory.
Merchandise that was sold and shipped
FOB shipping point on the last day of the Answer 7
year was not included in the seller's Net income for the current year w ill be understated.
ending inventory.
Merchandise held on consignment was Answer 8
included in the count of ending inventory. Net income for the current year w ill be overstated.
Câu hỏi 26
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Garrison Company uses the retail method of inventory costing.  It started the year with an inventory that
had a retail cost of $45,000.  During the year, Garrison purchased an inventory with a retail sales value of
$300,000.  After performing a physical inventory, Garrison calculated the inventory at retail to be
$80,000.  The markup is 100% of cost.  Determine the ending inventory at its estimated cost.

Select one:
a. $45,000
b. $160,000
c. $80,000
d. $40,000

Câu hỏi 27
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Damaged merchandise that can be sold only at prices below cost should be valued at

Select one:
a. net realizable value
b. average cost
c. LIFO
d. FIFO

Câu hỏi 28
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If the estimated rate of gross profit is 30%, what is the estimated cost of the merchandise inventory on
September 30, based on the following data?

Sept. 1 Merchandise inventory (at cost) $125,000

Sept. 1-30 Purchases, net (at cost) 300,000

Sept. 1-30 Sales 150,000

Select one:
a. $275,000
b. $320,000
c. $105,000
d. $192,500

Câu hỏi 29
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Match each description to the appropriate cost flow assumption (a-c).

Answer 1
Does not follow the physical flow of goods in most cases Ch?n...

Produces the same cost of merchandise sold under both the periodic and Answer 2
the perpetual inventory systems Ch?n...

Answer 3
Produces the highest gross profit when costs are decreasing Ch?n...

Answer 4
Prohibited under International Financial Reporting Standards (IFRS) Ch?n...

Answer 5
Assigns the same value to all inventory units Ch?n...

Answer 6
Rarely used with a perpetual inventory system Ch?n...

Answer 7
Produces results that are similar to the specific identification method Ch?n...

Answer 8
Cost of the latest purchases are assigned to ending inventory Ch?n...

Answer 9
Widely used for tax purposes Ch?n...

Answer 10
Never results in either the highest or lowest possible net income Ch?n...

Answer 11
Produces the highest ending inventory when costs are increasing Ch?n...
Câu hỏi 30
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Under a periodic inventory system

Select one:
a. Merchandise Inventory is debited when goods are returned to vendors
b. a physical inventory is taken at the end of the period
c. a separate account for each type of merchandise is maintained in a subsidiary ledger
d. accounting records continuously disclose the amount of inventory