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Exam 6: Inventories

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Question 71

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The specific identification inventory method should be used when the inventory consists of identical, low cost units that are purchased and sold frequently.

A) True
B) False

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Question 72

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Of the three widely used inventory costing methods (FIFO, LIFO, and average cost), the LIFO method of costing inventory assumes costs are charged based on the most recent purchases first.

A) True
B) False

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Question 73

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

The inventory method that assigns the most recent costs to cost of goods sold is

The following units of a particular item were available for sale during the year: 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?

Use the following information to answer the following questions. The 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 ending inventory value for the month of May using the FIFO inventory cost method.

Cost flow is in the order in which costs were incurred when using

The selection of an inventory costing method has no significant impact on the financial statements.

FIFO is the inventory costing method that follows the physical flow of the goods.

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 LIFO.

The three identical units of Product Basic H are purchased during July, as shown below. Assume one unit sells on July 28 for $45. Determine the gross profit, cost of merchandise sold, and ending inventory on July 31 using (a) first in first out, (b) last in last out, (c) average cost flow methods.

Inventory costing methods place primary emphasis on assumptions about

Under the _________ inventory method, accounting records maintain a continuously updated inventory value.

A perpetual inventory system is an effective means of control over inventory.

During times of rising prices, which of the following is not an accurate statement?

Under the periodic inventory system, a physical inventory is taken to determine the cost of the inventory on hand and the cost of the merchandise sold.

Direct disposal costs do not include special advertising or sales commissions.

During periods of increasing costs, the use of the FIFO method of costing inventory will yield an inventory amount for the balance sheet that is higher than LIFO would produce.

The following lots of a particular commodity were available for sale during the year: The firm uses the periodic system and there are 20 units of the commodity on hand at the end of the year. What is the amount of cost of good sold for the year according to the average cost method?

Fill in the missing amounts from the chart below regarding the calculation of Bean Corporation's estimated inventory using the retail method of estimation.