Question 1
The specific identification method and the FIFO method produce the same results under both the perpetual and periodic inventory systems.
True
False
Question 2
Supply-chain management helps companies maintain lower levels of inventory.
True
False
Question 3
Freight charges associated with the purchase of inventory normally are not included in inventory cost.
True
False
Question 4
Direct materials and direct labor are components of manufacturing overhead.
True
False
Question 5
The costs of an automated perpetual inventory system are considerable because they include the costs of automating the system, maintaining the system, and taking a physical inventory.
True
False
Question 6
An understatement of year 1's beginning inventory will
cause year 2's gross margin to be overstated.
cause year 1's cost of goods sold to be understated.
cause year 2's gross margin to be understated.
have no effect on year 1's gross margin.
Question 7
An understatement of ending inventory in one period results in
an overstatement of the ending inventory of the next period.
an understatement of gross margin of the next period.
an overstatement of gross margin of the next period.
no effect on gross margin of the next period.
Question 8
Which of the following would normally be included in the inventory?
Outgoing goods shipped FOB destination
Goods sold but not yet delivered
Incoming goods shipped FOB destination
Goods held on consignment
Question 9
Which costing method assumes that the cost of the first items acquired should be assigned to the first items sold?
Specific identification
FIFO
Average-cost
LIFO
Question 10
Inventory turnover is expressed in terms of
days.
a percentage.
dollars.
times.
Question 11
Which of the following is an inventory valuation method?
First-in, first-out
Average-cost
Lower-of-cost-or-market
Perpetual
Question 12
Which costing method is based on the reasoning that the fairest determination of income occurs if the current costs are matched against current sales prices?
Specific identification
FIFO
Average-cost
LIFO
Question 13
Which of the following is an inventory costing method?
Perpetual
Lower-of-cost-or-market
Specific identification
Periodic
Question 14
Which of the following costs usually would not be included in the inventory cost?
Storage costs
Related tariffs
Invoice price less purchases discounts
Insurance on goods in transit
Question 15
Days' inventory on hand equals 365 divided by
inventory turnover.
cost of goods sold.
goods available for sale.
average inventory.
Question 16
Use this inventory information for the month of August to answer the following question.
Aug.
1 Beginning inventory 10 units @ $130
5 Purchase 60 units @ $122
14 Sale 40 units
21 Purchase 30 units @ $126
31 Sale 28 units
Assuming that a perpetual inventory system is used, what is ending inventory on a FIFO basis?
$3,904
$3,984
$4,024
More information is needed.
Question 17
Powell's inventory turnover is 4.8. What is Powell's day's inventory on hand?
6 days
13 days
34 days
76 days
Question 18
Use this information to answer the following question.
Beginning inventory 100 units @ $8.00
Purchase-Oct. 200 units @ $6.00
Purchase-Dec. 100 units @ $12.00
A periodic inventory system is used; ending inventory is 150 units.
What is ending inventory under the average-cost method?
$900
$1,050
$1,350
$1,200
Question 19
Use this inventory information for the month of March to answer the following question.
March
1 Beginning inventory 30 units @ $56
7 Purchase 60 units @ $60
18 Sale 25 units
22 Purchase 10 units @ $66
29 Sale 40 units
Assuming that a periodic inventory system is used, what is cost of goods sold on a FIFO basis?
$2,160
$3,780
$3,861
$5,940
Question 20
Average inventory equals $200,000, and cost of goods sold equals $442,000. Days' inventory on hand equals
165.2 days.
Not enough information available to answer the question.
154.3 days.
188.7 days.