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Exam 6: Inventory and Cost of Goods Sold

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Question 71

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Listed below are ten terms followed by a list of phrases that describe or characterize five of the terms.Match each phrase with the best term placing the letter designating the term in the space provided. -_____ Inventory costing method that matches each unit of inventory with its actual cost.

A) Ending inventory
B) Freight-in
C) Cost of goods sold
D) LIFO conformity rule
E) LIFO
F) Freight-out
G) LIFO reserve
H) Specific identification
I) FIFO
J) Average cost

K) A) and E)
L) A) and D)

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Question 72

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Listed below are four terms followed by a list of phrases that describe or characterize the terms.Match each phrase with the best term placing the letter designating the term in the space provided. -_____ Requires a debit to cost of goods sold when inventory is sold.

A) FOB shipping point
B) FOB destination
C) Periodic inventory system
D) Perpetual inventory system

E) A) and C)
F) A) and D)

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Question 73

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Consider the following information pertaining to OldWest's inventory: At what amount should OldWest report its inventory?

The use of the lower-of-cost-or-market method to report inventory is an example of conservatism in financial reporting.

Inventory is usually reported as a long-term asset in the balance sheet.

The practice of using the lower-of-cost-or-market to evaluate inventory reflects which of the following accounting principles?

The following information relates to inventory for Shoeless Joe Inc. At what amount would Shoeless report cost of goods sold using the weighted-average cost flow assumption? (Round your answer to the nearest dollar)

A company overstated its ending inventory balance by $9,000 in 2015.What impact will this error have on total assets and retained earnings in 2015 and 2016 (ignoring tax effects)?

If a company understates its ending balance of inventory in year 1 and it records inventory correctly in year 2,which one of the following is true?

A company reports inventory using the lower-of-cost-or-market method.Below is information related to its year-end inventory: Calculate ending inventory under lower-of-cost-or-market and record any necessary adjustment to inventory.

Listed below are ten terms followed by a list of phrases that describe or characterize five of the terms.Match each phrase with the best term placing the letter designating the term in the space provided. -_____ Cost flow assumption that assumes first units purchased are sold first.

The primary reason for the popularity of LIFO is that it gives:

Listed below are ten terms followed by a list of phrases that describe or characterize five of the terms.Match each phrase with the best term placing the letter designating the term in the space provided. -_____ Cost of inventory not sold by the end of the period.

Companies are not allowed to report inventory costs by assuming which units of inventory are sold and which units still remain on hand.

When the value of inventory falls below its cost,companies have the option of recording the inventory at cost or the lower market value.

Understating ending inventory in the current year causes cost of goods sold in the current year to be understated.

Cost of goods sold is an expense reported in the income statement and represents the cost of inventory sold during the period.

Suppose that Hastings Corporation overstates its ending inventory for 2015.What effect will this have on the reported amount of cost of goods sold for 2015?

The distinction between operating and nonoperating income relates to:

If a company has ending inventory of $25,000,purchases during the year of $95,000,and beginning inventory of $30,000,cost of goods sold equals $90,000.