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Quiz am chapter 6, erstellt von robertse10 am 27/10/2014.

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chapter 6

Frage 1 von 48

1

Manufactured inventory that has begun the production process but is not yet completed is

Wähle eine der folgenden:

  • work in process.

  • raw materials.

  • merchandise inventory.

  • finished goods.

Erklärung

Frage 2 von 48

1

The factor which determines whether or not goods should be included in a physical count of inventory is

Wähle eine der folgenden:

  • physical possession.

  • whether or not the purchase price has been paid.

  • management's judgment.

  • legal title

Erklärung

Frage 3 von 48

1

If goods in transit are shipped FOB destination

Wähle eine der folgenden:

  • the seller has legal title to the goods until they are delivered.

  • the buyer has legal title to the goods until they are delivered.

  • the transportation company has legal title to the goods while the goods are in transit.

  • no one has legal title to the goods until they are delivered.

Erklärung

Frage 4 von 48

1

Independent internal verification of the physical inventory process occurs when

Wähle eine der folgenden:

  • a second employee counts the inventory and compares the result to the count made by the first employee.

  • all prenumbered inventory tags are accounted for.

  • the items counted are compared to the inventory account balance.

  • the employee is required to count all items twice for sake of verification.

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Frage 5 von 48

1

An employee assigned to counting computer monitors in boxes should

Wähle eine der folgenden:

  • determine that the box contains a monitor.

  • rely on the warehouse records of the number of computer monitors.

  • read each box and rely on the box description for the contents.

  • estimate the number if there is a large quantity to be counted.

Erklärung

Frage 6 von 48

1

After the physical inventory is completed

Wähle eine der folgenden:

  • quantities are entered into various general ledger inventory accounts.

  • unit costs are determined by dividing the quantities on the summary sheets by the total inventory costs.

  • the accuracy of the inventory summary sheets is checked by the person listing the quantities on the sheets.

  • quantities are listed on inventory summary sheets.

Erklärung

Frage 7 von 48

1

When is a physical inventory usually taken?

Wähle eine der folgenden:

  • When the company has its greatest amount of inventory.

  • At the end of the company’s fiscal year.

  • When the company has its greatest amount of inventory and at the end of the company's fiscal year.

  • When goods are not being sold or received.

Erklärung

Frage 8 von 48

1

Which of the following should not be included in the physical inventory of a company

Wähle eine der folgenden:

  • Goods shipped on consignment to another company.

  • All of these answer choices should be included.

  • Goods held on consignment from another company.

  • Goods in transit from another company shipped FOB shipping point.

Erklärung

Frage 9 von 48

1

Tidwell Company's goods in transit at December 31 include sales made
(1) FOB destination
(2) FOB shipping point
and purchases made
(3) FOB destination
(4) FOB shipping point.

Which items should be included in Tidwell's inventory at December 31?

Wähle eine der folgenden:

  • (2) and (4)

  • Sales made FOB shipping point and purchase made FOB destination

  • (1) and (4)

  • (1) and (3)

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Frage 10 von 48

1

The term "FOB" denotes

Wähle eine der folgenden:

  • freight charge on buyer.

  • free only (to) buyer.

  • free on board.

  • freight on board.

Erklärung

Frage 11 von 48

1

Goods held on consignment are

Wähle eine der folgenden:

  • kept for sale on the premises of the consignor.

  • included as part of no one’s ending inventory.

  • never owned by the consignee.

  • included in the consignee’s ending inventory.

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Frage 12 von 48

1

Many companies use just-in-time inventory methods. Which of the following is not an advantage of this method?

Wähle eine der folgenden:

  • It lowers inventory levels and costs.

  • Companies can respond to individual customer requests.

  • it limits the risk of having obsolete items in inventory.

  • Companies may not have quantities to meet customer demand.

Erklärung

Frage 13 von 48

1

When a perpetual inventory system is used, which of the following is a purpose of taking a physical inventory

Wähle eine der folgenden:

  • All are a purpose of taking a physical inventory when a perpetual inventory system is used.

  • To check the accuracy of the perpetual inventory records

  • To determine cost of goods sold for the accounting period

  • To compute inventory ratios

Erklärung

Frage 14 von 48

1

Which statement is false?

Wähle eine der folgenden:

  • Companies that use a perpetual inventory system must take a physical inventory to determine inventory on hand on the balance sheet date and to determine cost of goods sold for the accounting period.

  • An inventory count is generally more accurate when goods are not being sold or received during the counting.

  • Taking a physical inventory involves actually counting, weighing, or measuring each kind of inventory on hand.
    Noing period.

  • No matter whether a periodic or perpetual inventory system is used, all companies need to determine inventory quantities at the end of each accounting period.

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Frage 15 von 48

1

Reeves Company is taking a physical inventory on March 31, the last day of its fiscal year. Which of the following must be included in this inventory count?

Wähle eine der folgenden:

  • Goods that Reeves is holding on consignment for Parker Company

  • Goods in transit that Reeves has sold to Smith Company, FOB shipping point

  • Goods that Reeves is holding in inventory on March 31 for which the related Accounts Payable is 15 days past due

  • Goods in transit to Reeves, FOB destination

Erklärung

Frage 16 von 48

1

Manufacturers usually classify inventory into all the following general categories except

Wähle eine der folgenden:

  • work in process.

  • merchandise inventory.

  • raw materials.

  • finished goods.

Erklärung

Frage 17 von 48

1

Johnson Company has a high inventory turnover that has increased over the last year. All of the following statements are true regarding this situation except Johnson County:

Wähle eine der folgenden:

  • is increasing the amount of inventory on hand relative to sales.

  • may be losing sales due to inventory shortages.

  • has a cost of goods sold that is increasing relative to its average inventory.

  • is minimizing funds tied up in inventory.

Erklärung

Frage 18 von 48

1

Days in inventory is calculated by dividing 365 days by

Wähle eine der folgenden:

  • the inventory turnover.

  • beginning inventory.

  • ending inventory.

  • average inventory.

Erklärung

Frage 19 von 48

1

Which of these would cause the inventory turnover ratio to increase the most?

Wähle eine der folgenden:

  • keeping the amount of inventory on hand constant but decreasing sales.

  • decreasing the amount of inventory on hand and increasing sales.

  • increasing the amount of inventory on hand.

  • keeping the amount of inventory on hand constant but increasing sales.

Erklärung

Frage 20 von 48

1

A low number of days in inventory may indicate all of the following except

Wähle eine der folgenden:

  • There is less chance of having obsolete inventory items.

  • The company has fewer funds tied up in inventory.

  • Management has achieved the best balance between too much and too little inventory levels.

  • Sales opportunities may be lost because of inventory shortages.

Erklärung

Frage 21 von 48

1

Inventory costing methods place primary reliance on assumptions about the flow of

Wähle eine der folgenden:

  • goods.

  • resale prices.

  • values.

  • costs.

Erklärung

Frage 22 von 48

1

The LIFO inventory method assumes that the cost of the latest units purchased are

Wähle eine der folgenden:

  • the first to be allocated to ending inventory.

  • the last to be allocated to cost of goods sold.

  • the first to be allocated to cost of goods sold.

  • not allocated to cost of goods sold or ending inventory.

Erklärung

Frage 23 von 48

1

Which of the following is an inventory costing method?

Wähle eine der folgenden:

  • Perpetual

  • Specific identification

  • Lower of cost or market

  • Periodic

Erklärung

Frage 24 von 48

1

Which of the following terms best describes the assumption made in applying the four inventory methods?

Wähle eine der folgenden:

  • Asset flow

  • Physical flow

  • Goods flow

  • Cost flow

Erklärung

Frage 25 von 48

1

An assumption about cost flow is necessary

Wähle eine der folgenden:

  • even when there is no change in the purchase price on inventory.

  • because prices usually change, and tracking which units have been sold is difficult.

  • only when the flow of goods cannot be determined.

  • because it is required by the income tax regulation.

Erklärung

Frage 26 von 48

1

Which of the following items will increase inventoriable costs for the buyer of goods?

Wähle eine der folgenden:

  • purchase discounts taken by the purchaser

  • freight charges paid by the purchaser

  • purchase returns and allowances granted by the seller

  • freight charges paid by the seller

Erklärung

Frage 27 von 48

1

Of the following companies, which one would not likely employ the specific identification method for inventory costing?

Wähle eine der folgenden:

  • music store specializing in organ sales

  • farm implement dealership

  • antique shop

  • hardware store

Erklärung

Frage 28 von 48

1

A problem with the specific identification method is that

Wähle eine der folgenden:

  • the lower of cost or market basis cannot be applied.

  • inventories can be reported at actual costs.

  • management can manipulate income.

  • matching is not achieved.

Erklärung

Frage 29 von 48

1

The selection of an appropriate inventory cost flow assumption for an individual company is made by

Wähle eine der folgenden:

  • the internal auditors.

  • management.

  • the external auditors.

  • the SEC.

Erklärung

Frage 30 von 48

1

The accounting principle that requires that the cost flow assumption be consistent with the physical movement of goods is

Wähle eine der folgenden:

  • called the consistency principle.

  • called the physical flow assumption.

  • called the matching principle.

  • nonexistent; that is, there is no such accounting requirement.

Erklärung

Frage 31 von 48

1

Which of the following statements is true regarding inventory cost flow assumptions?

Wähle eine der folgenden:

  • A company must use the same method for domestic and foreign operations.

  • A company may never change its inventory costing method once it has chosen a method.

  • A company must comply with the method specified by industry standards.

  • A company may use more than one costing method concurrently.

Erklärung

Frage 32 von 48

1

Which of the following statements is correct with respect to inventories?

Wähle eine der folgenden:

  • The FIFO method assumes that the costs of the earliest goods acquired are the last to be sold.

  • Under FIFO, the ending inventory is based on the latest units purchased.

  • FIFO seldom coincides with the actual physical flow of inventory.

  • It is generally good business management to sell the most recently acquired goods first

Erklärung

Frage 33 von 48

1

Given equal circumstances, which inventory method would probably be the most time consuming?

Wähle eine der folgenden:

  • LIFO

  • Specific identification

  • FIFO

  • Average cost

Erklärung

Frage 34 von 48

1

Which inventory costing method should a gasoline retailer use?

Wähle eine der folgenden:

  • LIFO

  • FIFO

  • either LIFO or FIFO

  • average cost

Erklärung

Frage 35 von 48

1

In periods of rising prices, which is an advantage of using the LIFO inventory costing method?

Wähle eine der folgenden:

  • Ending inventory will include latest (most recent) costs and thus be more realistic.
    Net income will be the highest and thus reflect the prosperity of the c

  • Net income will be the highest and thus reflect the prosperity of the company.

  • Phantom profits are reported.

  • Cost of goods sold will include latest (most recent) costs and thus will be more realistic.

Erklärung

Frage 36 von 48

1

In periods of rising prices, the inventory method which results in the inventory value on the balance sheet that is closest to current cost is the

Wähle eine der folgenden:

  • FIFO method.

  • LIFO method.

  • average-cost method.

  • tax method.

Erklärung

Frage 37 von 48

1

In a period of declining prices, which of the following inventory methods generally results in the lowest balance sheet figure for inventory

Wähle eine der folgenden:

  • FIFO method

  • Need more information to answer

  • Average cost method

  • LIFO method

Erklärung

Frage 38 von 48

1

In a period of rising prices, which of the following inventory methods generally results in the lowest net income figure?

Wähle eine der folgenden:

  • Average cost method

  • FIFO method

  • Need more information to answer

  • LIFO method

Erklärung

Frage 39 von 48

1

Which inventory method generally results in costs allocated to ending inventory that will approximate their current cost?

Wähle eine der folgenden:

  • LIFO

  • Whichever method that produces the highest ending inventory figure

  • FIFO

  • Average cost method

Erklärung

Frage 40 von 48

1

Two companies report the same cost of goods available for sale but each employs a different inventory costing method. If the price of goods has increased during the period, then the company using

Wähle eine der folgenden:

  • FIFO will have the highest cost of goods sold.

  • FIFO will have the highest ending inventory.

  • LIFO will have the highest ending inventory.

  • LIFO will have the lowest cost of goods sold.

Erklärung

Frage 41 von 48

1

If companies have identical inventoriable costs but use different inventory flow assumptions when the price of goods have not been constant, then the

Wähle eine der folgenden:

  • net income of the companies will be identical.

  • ending inventory of the companies will be identical.

  • cost of goods purchased during the year will be identical.

  • cost of goods sold of the companies will be identical.

Erklärung

Frage 42 von 48

1

In a period of increasing prices, which inventory flow assumption will result in the lowest amount of income tax expense?

Wähle eine der folgenden:

  • Average cost method

  • LIFO

  • Income tax expense for the period will be the same under all assumptions

  • FIFO

Erklärung

Frage 43 von 48

1

Given equal circumstances and generally rising costs, which inventory method will increase the tax expense the most?

Wähle eine der folgenden:

  • Average cost method

  • LIFO

  • Income tax expense for the period will be the same under all assumptions

  • FIFO

Erklärung

Frage 44 von 48

1

The specific identification method of costing inventories is used when the

Wähle eine der folgenden:

  • company sells large quantities of relatively low cost homogeneous items.

  • company sells a limited quantity of high-unit cost items.

  • physical flow of units cannot be determined.

  • company sells large quantities of relatively low cost heterogeneous items.

Erklärung

Frage 45 von 48

1

The specific identification method of inventory costing

Wähle eine der folgenden:

  • may enable management to manipulate net income.

  • always maximizes a company's net income.

  • always minimizes a company's net income.

  • has no effect on a company's net income.

Erklärung

Frage 46 von 48

1

The managers of Hong Company receive performance bonuses based on the net income of the firm. Which inventory costing method are they likely to favor in periods of declining prices?

Wähle eine der folgenden:

  • LIFO

  • Average cost

  • Physical inventory method

  • FIFO

Erklärung

Frage 47 von 48

1

In periods of inflation, phantom or paper profits may be reported as a result of using the

Wähle eine der folgenden:

  • periodic inventory method.

  • perpetual inventory method.

  • FIFO costing assumption.

  • LIFO costing assumption.

Erklärung

Frage 48 von 48

1

Selection of an inventory costing method by management does not usually depend on

Wähle eine der folgenden:

  • tax effects.

  • the fiscal year end.

  • income statement effects.

  • balance sheet effects.

Erklärung

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