Chapter 06 – Inventories
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Page 31
b.
$1,263
c.
$1,375
d.
$1,150
ANSWER:
b
RATIONALE:
Average cost per unit = [($55 × 10 units) + ($60 × 25 units) + ($65 × 30 units) + ($70
× 15 units)] / (10 units + 25 units + 30 units + 15 units) = $63.125
The value of ending inventory using average cost = 20 units × $63.125 = $1,263
POINTS:
1
DIFFICULTY:
Moderate
Bloom’s: Applying
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
PREFACE NAME:
Periodic units
LEARNING OBJECTIVES:
FNMN.WAJO.19.06-04 – LO: 06–04
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.17 – Inventories Reporting
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
7/22/2017 6:20 PM
DATE MODIFIED:
10/16/2017 5:09 PM
The following lots of Commodity Z were available for sale during the year. Use this information to answer the questions
that follow.
Beginning inventory
10 units at $30
First purchase
25 units at $32
Second purchase
30 units at $34
Third purchase
10 units at $35
77. The firm uses the periodic system, and there are 20 units of the commodity on hand at the end of the year. What is the
ending inventory balance at the end of the year according to the LIFO method?
a.
$655
b.
$620
c.
$690
d.
$659
ANSWER:
b
RATIONALE:
Ending inventory using LIFO = 10 units at $30 from the beginning inventory + 10
units at $32 from the first purchase = $300 + $320 = $620
POINTS:
1
DIFFICULTY:
Moderate
Bloom’s: Applying
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
PREFACE NAME:
Periodic2
LEARNING OBJECTIVES:
FNMN.WAJO.19.06-04 – LO: 06–04
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.17 – Inventories Reporting
Copyright Cengage Learning. Powered by Cognero.
Page 38
90. If the revenues are correctly reported and the gross profit of a company is understated, what is the effect on
stockholders’ equity?
a.
understated
b.
overstated
c.
correctly stated
d.
none of these
ANSWER:
a
POINTS:
1
DIFFICULTY:
Bloom’s: Remembering
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.06-07 – LO: 06–07
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.17 – Inventories Reporting
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
7/22/2017 6:20 PM
DATE MODIFIED:
10/16/2017 5:09 PM
91. If inventory is being valued at cost and the price level is steadily rising, the method of costing that will yield the
highest net income is
a.
periodic
b.
LIFO
c.
FIFO
d.
average cost
ANSWER:
c
POINTS:
1
DIFFICULTY:
Challenging
Bloom’s: Applying
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.06-05 – LO: 06–05
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.17 – Inventories Reporting
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
7/22/2017 6:20 PM
DATE MODIFIED:
10/16/2017 5:09 PM
92. If inventory is being valued at cost and the purchase price is steadily falling, which method of costing will yield the
largest net income?
a.
average cost
b.
LIFO
c.
FIFO
d.
weighted average
ANSWER:
b
