When using the weighted-average cost method to determine the cost of inventory, the weighted-average cost per unit is calculated as the:
A) cost of goods available for sale divided by the number of units available for sale
B) cost of goods sold divided by the average number of units in inventory
C) cost of goods sold divided by the number of units sold
D) cost of goods in ending inventory divided by the number of units in ending inventory
22) When applying the lower-of-cost-or-net-realizable-value rule, market value generally refers to:
A) net realizable value of the inventory
B) sales price of the inventory
C) sales price less cost of selling it
D) fair market value of the inventory on purchase date
23) If year-end inventory is reduced from cost to a lower replacement cost, which of the following accurately depicts the results?
A) Year-end inventory is reduced and cost of goods sold is reduced by the same amount.
B) Cost of goods sold is reduced and beginning inventory of the next period is reduced by the same amount.
C) The capital account balance is increased and beginning inventory of the next period is reduced by the same amount.
D) Cost of goods sold is increased and beginning inventory of the next period is decreased by the same amount.
24) Consider the following data:
Ending inventory at cost$115,000
Ending inventory at market119,000
Cost of goods sold (before consideration of LCNRV rule)165,000
Which of the following depicts the proper account balance after the application of the LCNRV rule?
A) Ending Inventory balance will be $119,000.
B) Ending Inventory balance will be $115,000.
C) Cost of Goods Sold will be $161,000.
D) Cost of Goods Sold will be $169,000.
25) The disclosure principle requires that management prepare financial reports that disclose all of the following types of information except:
A) the method of inventory used
B) forecasts of expected future earnings to help investors decide whether to invest in the company
C) information that facilitates comparison with other companies' financial reports
D) information that is relevant to decision making
26) Inventory turnover is calculated by:
A) dividing average inventory by cost of goods sold
B) dividing cost of goods sold by average inventory
C) multiplying average inventory by cost of goods sold
D) subtracting ending inventory from cost of goods sold
27) The gross margin rate is equal to:
A) net sales revenue minus cost of goods sold
B) gross margin divided by net sales revenue
C) net sales revenue minus gross margin on sales
D) cost of goods sold divided by net sales revenue
28) Data for Flat Panel Ltd. for the year ended December 31, 2010, are as follows:
Cost of goods sold90,000
Inventory turnover for 2010 is:
29) Victory Stables Ltd. for the year ended December 31, 2010, are as follows:
Cost of goods sold110,000
The Gross Profit percentage for 2010 is:
30) The gross margin percentage is one of the most closely watched profitability measures. It can be calculated by:
A) dividing cost of goods sold by average inventory
B) dividing gross margin by net sales revenue
C) dividing gross margin by net accounts receivable
D) dividing cost of goods sold by net sales revenue
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