Inventory

Question 1

Purchases - Net of Discounts, Freight, Warehouse expenditures

Answer 1

Inventory

Question 2

FOB Shipping Point puts the inventory into the hands of the buyer from the loading dock

Answer 2

Inventory

Question 3

FOB Destination keeps the items in the seller’s inventory until it reaches the buyer

Answer 3

Inventory

Question 4

Sales Commissions

Interest on liabilities to vendors

Shipping expense to customers

Answer 4

Inventory

Question 5

Under the gross method, discounts are recorded only when used.

Answer 5

Inventory

Question 6

Under the net method, discounts are recorded whether used or not.

Unused discounts are allocated to financing expense.

Answer 6

Inventory

Question 7

Gross Margin : Sales - COGS (BI + P - EI)

Answer 7

Inventory

Question 8

Inventory is counted at certain times throughout the period

Weighted-average cost flow method is used.

Answer 8

Inventory

Question 9

Inventory count continually updated

Uses a moving-average cost flow method

Answer 9

Inventory

Question 10

Under the FIFO system, periodic and perpetual inventory methods will both have the same ending inventory.

Answer 10

Inventory

Question 11

COGS / Average Inventory

Answer 11

Inventory

Question 12

365 / Inventory Turnover

Answer 12

Inventory

Question 13

The CONSIGNOR holds the consigned items in their inventory count. The cost includes the shipping to the consignee.

Answer 13

Inventory

Question 14

No. Consignment goods are maintained in the inventory of the consignor, not the consignee.

Answer 14

Inventory

Question 15

Misstatement of beginning inventory does NOT have an effect on ending retained earnings.

Misstatement of ENDING inventory does have an effect on retained earnings.

Answer 15

Inventory

Question 16

EI Over : COGS Under : ERE Over

EI Under : COGS Over : ERE Under

Answer 16

Inventory

Question 17

The first (oldest) inventory you have in stock is the first inventory you record for COGS purposes. If your oldest inventory on the shelf cost you $1 when you bought it, COGS is $1

This is just for inventory pricing. It has nothing to do with physically selling the oldest item on the shelf - It is purely for accounting purposes

Answer 17

Inventory

Question 18

The last (newest) inventory you have in stock is the first inventory you record for COGS purposes. If your newest inventory on the shelf cost you $1.50 when you bought it, COGS is $1.50

Answer 18

Inventory

Question 19

COGAS / Total Units : Weighted Average Cost Per Unit

Answer 19

Inventory

Question 20

FIFO’s relationship to COGS will be opposite LIFO’s relationship to COGS in periods of falling/rising prices.

Answer 20

Inventory

Question 21

FIFO has the Lowest COGS

FIFO is a cat that sees a mouse starts Low and is Rising

If COGS is Low, that means EI is High

Answer 21

Inventory

Question 22

FIFO has the Highest COGS

Remember: FIFO, that silly cat, got High from Catnip and is Falling off the couch

If COGS is High, that means EI is Low

Answer 22

Inventory

Question 23

Market Ceiling : Net Realizable Value : Selling Price - Selling Costs

Market : Replacement Cost

Market Floor : Net Realizable Value - Normal Profit

Answer 23

Inventory