Inventory

Question 0

Transportation to consigee is part of?

Answer 0

The cost for inventory which also includes fright- ins etc.

Question 1

The dollar value LIFO adjust inventory retail prices and ending inventory cost for?

Answer 1

Price level changes.

Question 2

From FIFO to LIFO Net income and ending inventory?

Answer 2

BOTH decreases!

Question 3

Interest to finance construction of machine for own used is

Answer 3

CAP as part of cost mechanism, it is not an interest expense.

Question 4

Beg inventory US 26, end inventory OS 52, then COGS is?

Answer 4

US by 78000 —-
-26-COGS=52
COGS =-78000

Question 5

Using lower of cost or market apply to each item separately in order to?

Answer 5

Get the lowest inventory amount.

Question 6

LIFO reserve is

Answer 6

The difference between inventory on the LIFO method vs any other cost method.

Question 7

Weighted Average Method: Periodic

Answer 7

Total cost/total unit purchased= cost per unit

Question 8

Moving Average Method– Perpetual system

Answer 8

Compute new weighted average after each purchase.

Question 9

Merchandise out on consignment, at sales price, including 40% mark up on selling price of ¥40000 means

Answer 9

The 40% markup is not part of your inventory. So (.40)(40K)=16K is not yours. 40-16= 24 only 24 is yours.

Question 10

Disadvantage of periodic inventory is that COGS use for financial reporting includes

Answer 10

Cost of inventory sold and inventory shortages.

Question 11

Gross margin%=

Answer 11

Rev-COGS/Rev

Question 12

Overstatement of ending inventory will overstate gross profit because

Answer 12

OS of end inventory understated COGS which will Overstate gross profit.

Question 13

Net realizable value is the ceiling but net carrying value is

Answer 13

The lower of cost or market!!! Tricky don’t get it mixed up!!!

Question 14

Insurance cost during transit of purchased goods is part of the

Answer 14

Cost of inventory

Question 15

Shipping cost = 1.5
Purchased =12
End inventory= 3

How much shipping cost is for end inventory?

Answer 15

(1.5/12)=(x/3)

x = .375 or 375,000

Question 16

Create a liability of the expected or accrued loss when

Answer 16

The price you paid is less then the FMV

Question 17

US of asset or ending inventory =

OS of COGS, which will

Answer 17

Understate net income and retained earnings.

Question 18

Which inventory costing method will produce a lower inventory turnover ratio during inflation?

Answer 18

FIFO, BC inventory turnover = COGS/avg inventory … So we want a lower COGS so we used FIFO

Question 19

When calculating net profit on a consigned transaction remember that the profit is based on the percentage of the inventory sold… Don’t forgot

Answer 19

That sales were on 2/3 of inventory you only include 2/3 inventory cost of COGS and also 2/3 of freight cost… BUT use full amount of advertising cost.

Question 20

Sewage system is not land cost

Answer 20

It is land improvement!

Question 21

Interest on loan to buy land is expensed unless

Answer 21

It is discrete manufacturing activity .

Question 22

Aging the receivables

Answer 22

Focus on BS, and valuation of assets.

Good matching and expense method.

Question 23

Which costing method most closely current cost

Answer 23

LIFO for cost of goods sold

FIFO for ending inventory

Question 24

Revenue is recognize at time of production and not time of sale..

Answer 24

So if you produce 300 lbs of cotton and Market price .70 then you rec rev of 210.