Chapter 7

Question 0

Receiving Report

Answer 0

Establishes an initial record of the receipt of inventory

Question 1

Purchase Order

Answer 1

Authorizes the purchase of the inventory from an authorized vendor

Question 2

Subsidiary Ledger

Answer 2

Where inventory is recorded in a perpetual inventory system

Question 3

Physical Inventory

Answer 3

Actual count of inventory - taken at lowest point

Question 4

LIFO

Answer 4

Cost flow is in the reverse order in which costs were incurred (last in, first out)

Question 5

Average Cost

Answer 5

Cost flow is an average of the costs

Question 6

Specific Identification Method

Answer 6

Unit sold is identified with a specific purpose ex vehicle

Question 7

Gross Profit

Answer 7

Sales - Cost of Goods Sold

Question 8

Beginning Inventory + Net Purchases

Answer 8

Merchandise Available for Sale

Question 9

MAFS - ending inventory

Answer 9

Cost of Goods Sold

Question 10

Lower of Cost or Market

Answer 10

Value is listed at the price which is lower of cost or market

Question 11

Net Realizable Value

Answer 11

Estimated selling price - direct costs on disposal

Question 12

Inventory Turnover

Answer 12

Cost of Merchandise Sold/average Inventory (measures the relationship between cost of merchandise sold and the amount of inventory carried during the period)

Question 13

Number of days’ sales in inventory

Answer 13

Average Inventory/Average daily cost of merchandise sold (rough measure of the length of time it takes to acquire, sell, and replace the inventory)

Question 14

Retail Method of Inventory Costing

Answer 14

A ratio of cost to retail price is used to convert ending inventory at retail to estimate the ending inventory

Question 15

Gross Profit Method of inventory Costing

Answer 15

Uses the estimated gross profit for the period to estimate the inventory at the end if the period

Question 16

3 security measures to safeguard inventory

Answer 16

1. Store inventory in areas that are restricted to authorized employees
2. Lick high prices inventory in cabinet3. Use two way mirrors, cameras, security tags and guards

Question 17

Begin inventory is 23 units at $20, purchase 1 is 25 units at $22 sale is 36 units, purchase 2 is 18 units at $25, sale 2 is 20 units

Answer 17

Using perpetual inventory determine CGS and ending inventory using FIFO and LIFO

Question 18

Sales were $575,000 and CMS was $400,000

Answer 18

Estimate cost of merchandise sold based on an estimated gross profit rate of 40%

Question 19

Given:beginning inventory at cost if $300,000 and retail of $400,000 and net purchases at cost of $600,000 and retail of $1,200,000 with sales of $900,000

Answer 19

Determine cost if ending inventory by the retail method

Question 20

Beginning inventory 25 units at $85
Purchase 1 50 units at $90
Purchase 2 60 units at $95
Purchase 3 35 units at $100

Answer 20

Using periodic inventory with 40 units left determine ending inventory using FIFO LIFO and. average