The inventory records for Ramirez Co. reflected the following - 17868

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1.

If prices are rising, which inventory cost flow method will produce the lowest amount of cost of goods sold?
    FIFO
    LIFO
    NIFO
    Weighted Average

2.
When the cost of inventory is rising, which inventory cost flow method will produce the lowest amount of cost of goods sold?
    FIFO
    Weighted Average.
    All methods will produce the same amount of cost of goods sold.
    LIFO

3.
In an inflationary environment,
    a company's net income will be higher if it uses FIFO than if it uses LIFO.
    a company's cost of goods sold will be lower if it uses LIFO as opposed to FIFO.
    a company's net income will be the same regardless of whether LIFO or FIFO is used.
    a company's assets will be lower if it uses FIFO as opposed to LIFO cost flow.


4.
Vincent Company uses the perpetual inventory method. Vincent purchased 400 units of inventory that cost $5.00 each. At a later date the company purchased an additional 800 units of inventory that cost $6.00 each. Vincent sold 500 units of inventory for $9.00. If Vincent uses a FIFO cost flow method, the amount of cost of goods sold appearing on the income statement will be:
    $1,900.
    $2,000.
    $1,500.
    $2,600.


5.
Which of the following businesses is most likely to use a specific identification cost flow method?
    Hardware store
    Grocery store
    Car dealership
    Roofing company


6.
The lower-of-cost-or-market rule can be applied to
    major classes or categories of inventory.
    the entire stock of inventory in aggregate.
    each individual inventory item.
    any of these.


7.
What is meant by "market" in lower-of-cost-or-market calculations?
    The amount of gross margin earned by selling merchandise.
    The amount the goods were sold for during the period.
    The amount that would have to be paid to replace the merchandise.
    The amount originally paid for the merchandise.


8.
Which of the following methods of applying the lower-of-cost-or-market rule will result in the fewest write-downs of inventory?
    The entire stock of inventory in aggregate.
    Average of cost of goods sold for the past three years.
    Major classes or categories of inventory.
    Each individual inventory item.


9.
An overstatement of ending inventory results in which of the following in the present period?
    Overstatement of total assets.
    Overstatement of cost of goods sold.
    Understatement of net income.
    Understatement of retained earnings.


10.
Inventory turnover is calculated by dividing:
    cost of goods sold by inventory.
    sales by inventory.
    beginning inventory by the ending inventory.
    inventory by cost of goods sold.



11.
Kent Company has an inventory turnover of 12.75, and its inventory amounts to $3,400,000. What is the amount of cost of goods sold?
    $266,667
    $43,350,000
    $26,666,667
    $51,000


12.
Haley Company purchased two identical inventory items. The item purchased first cost $32.00. The item purchased second cost $35.00. Haley sold one of the inventory items for $60.00. Based on this information:
    the amount of ending inventory is $32.00 if Haley uses the LIFO cost flow method.
    the amount of gross margin is $26.50 if Haley uses the weighted average cost flow method.
    the amount of cost of goods sold is $32.00 if Haley uses the FIFO cost flow method.
    All of the above are correct.





13-17
The inventory records for Ramirez Co. reflected the following
 
  Beginning Inventory @ May 1    200 units @ $2.00  
  First Purchase @ May 7    300 units @ $2.20  
  Second Purchase @ May 17    500 units @ $2.30  
  Third Purchase @ May 23    100 units @ $2.40  
  Sales @ May 31    900 units @ $3.90  


13.
Determine the weighted average cost per unit for May.
    $2.23
    $1.45
    $2.45
    $3.17


14.
Determine the amount of cost of goods sold assuming the LIFO cost flow method.
    $2,160
    $2,050
    $1,180
    $1,800



15.
Determine the amount of ending inventory assuming the FIFO cost flow method.
    $480
    $470
    $400
    None of the above


16.
Determine the amount of gross margin assuming the weighted average cost flow method.
    $1,503
    $2,160
    $1,305
    $657


17.
Determine the amount of gross margin assuming the FIFO cost flow method.
    $1,460
    $1,710
    $1,980
    $1,530





18.
If a firm is using the lower-of-cost-or-market rule and if a write-down entry is required, which of the following effects will apply?
    Net income will increase.
    Gross margin will decrease.
    Assets will be unaffected.
    Liabilities will increase.



19.
At the end of the 2013 accounting period DeFazio Company determined that the market value of its inventory was $39,900. The historical cost of this inventory was $40,700. DeFazio uses the perpetual inventory method. The entry necessary to reduce the inventory to the lower of cost or market will
    increase assets and increase liabilities.
    decrease assets and decrease liabilities.
    increase assets and increase net income.
    decrease assets and decrease net income.


20.
The gross margin method requires all but which of the following elements of information?
    Total sales for the present period.
    The ending inventory for the present period.
    Amount of purchases during the present period.
    The beginning inventory for the present period.


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