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Home / Questions / The following information pertains to Julia & Company March 1 Beginning inventory

The following information pertains to Julia & Company March 1 Beginning inventory

The following information pertains to Julia & Company:

March 1   Beginning inventory = 30 units @ $5

March 3   Purchased 15 units @ $4

March 9   Sold 25 units @ $8

 

What is the cost of goods sold for Julia & Company assuming it uses LIFO?

a. $125.

b. $100.

c. $110.

d. $85.

 

 

73. The following information pertains to Julia & Company:

March 1   Beginning inventory = 30 units @ $5

March 3   Purchased 15 units @ $4

March 9   Sold 25 units @ $8

 

What is the ending inventory balance for Julia & Company assuming that it uses FIFO?

a. $125.

b. $100.

c. $110.

d. $85.

 

 

              75. In a period when inventory costs are rising, the inventory method that most likely results in the highest ending inventory is:

a. Lower-of-cost-or-market method.

b. Weighted-average cost.

c. FIFO.

d. LIFO.

 

 

76. In a period when inventory costs are falling, the lowest taxable income is most likely reported by using the inventory method of:

a. Weighted-average.

b. LIFO.

c. Moving-average.

d. FIFO.

 

 

77. Which of the following is true regarding LIFO and FIFO?

a. In a period of decreasing costs, LIFO results in lower total assets than FIFO.

b. In a period of decreasing costs, LIFO results in lower net income than FIFO.

c. In a period of rising costs, LIFO results in lower net income than FIFO.

d. The amount reported for COGS is based on market value of inventory if LIFO is used.

 

 

              78. During periods when inventory costs are rising, cost of goods sold will most likely be:

a. Higher under FIFO than LIFO.

b. Higher under FIFO than average cost.

c. Lower under average cost than LIFO.

d. Lower under LIFO than FIFO.

 

 

79. In a period of rising costs, which inventory valuation method would a company likely choose if they want to have the highest possible balance of inventory on the balance sheet?

a. Weighted-average cost.

b. FIFO.

c. LIFO.

d. Periodic.

 

 

80. During periods when inventory costs are rising, ending inventory will most likely be:

a. Greater under LIFO than FIFO.

b. Less under average cost than LIFO.

c. Greater under average cost than FIFO.

d. Greater under FIFO than LIFO.

 

 

              81. The LIFO conformity rule states that if LIFO is used for:

a. One class of inventory, it must be used for all classes of inventory.

b. Tax purposes, it must be used for financial reporting.

c. One company in an affiliated group, it must be used by all companies in an affiliated group.

d. Domestic companies, it must be used by foreign partners.

 

 

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

a. Better matching of physical flow and cost flow.

b. A lower income tax obligation when inventory costs are rising.

c. Simplified recordkeeping.

d. A simpler method to apply.

 

 

              83. Which inventory method is better described as having an income statement focus and why is it considered as such?

a. FIFO; better approximates the value of ending inventory.

b. LIFO; better approximates the value of ending inventory.

c. LIFO; better approximates inventory cost necessary to generate revenue.

d. FIFO; better approximates inventory cost necessary to generate revenue.

 

 

              84. Which inventory method is better described as having a balance sheet focus and why is it considered as such?

a. FIFO; better approximates the value of ending inventory.

b. LIFO; better approximates the value of ending inventory.

c. LIFO; better approximates inventory cost necessary to generate revenue.

d. FIFO; better approximates inventory cost necessary to generate revenue.

 

 

85. Which of the following is true concerning inventory cost flow assumptions?

a. LIFO produces higher net income than FIFO in a period of rising costs.

b. FIFO is an income statement focus.

c. LIFO is a balance sheet focus.

d. None of the above are true.

 

 

86. Which of the following is incorrect regarding LIFO and FIFO?

a. In a period of decreasing costs, FIFO will result in lower total assets than LIFO.

b. In a period of increasing costs, net income will be greater under FIFO than LIFO.

c. In a period of increasing costs, assets will be greater for LIFO than FIFO.

e. In a period of decreasing costs, LIFO will result in greater net income than FIFO.

 

 

87. Which inventory cost flow assumption generally results in the highest reported amount for cost of goods sold when inventory costs are falling?

a. FIFO.

b. LIFO.

c. Weighted-average cost.

d. Straight-line.

 

 

88. On May 1, Ace Bonding Company purchased inventory costing $2,000 on account with terms 2/10, n/30. On May 18, Ace pays for this inventory and records which of the following using a perpetual inventory system?

a.

Accounts Payable

2,000

 

 

      Cash

 

2,000

 

 

 

 

b.

Accounts Payable

1,960

 

 

Inventory

40

 

 

      Cash

 

2,000

 

 

 

 

c.

Accounts Payable

2,000

 

 

      Inventory

 

40

 

      Cash

 

1,960

 

 

 

 

d.

Cash

2,000

 

 

      Accounts Payable

 

2,000

 

 

89. Davis Hardware Company uses a perpetual inventory system. How should Davis record the return of inventory previously purchased on account for $200?

a.

Inventory

200

 

 

      Accounts Payable

 

200

 

 

 

 

b.

Accounts Payable

200

 

 

      Inventory

 

200

 

 

 

 

c.

Purchase Returns

200

 

 

      Accounts Payable

 

200

 

 

 

 

d.

Accounts Payable

200

 

 

      Purchase Returns

 

200

 

 

90. On May 1, Ace Bonding Company purchased inventory costing $2,000 on account with terms 2/10, n/30. On May 8, Ace pays for this inventory and records which of the following using a perpetual inventory system?

a.

Accounts Payable

2,000

 

 

      Cash

 

2,000

 

 

 

 

b.

Accounts Payable

1,960

 

 

Inventory

40

 

 

      Cash

 

2,000

 

 

 

 

c.

Accounts Payable

2,000

 

 

      Inventory

 

40

 

      Cash

 

1,960

 

 

 

 

d.

Cash

2,000

 

 

      Accounts Payable

 

2,000

 

 

              91. In a perpetual inventory system, the purchase of inventory is debited to:

a. Purchases.

b. Cost of Goods Sold.

c. Inventory.

d. Accounts Payable.

 

 

              92. In a perpetual inventory system, at the time of a sale the cost of inventory sold is:

a. Debited to Accounts Receivable.

b. Credited to Cost of Goods Sold.

c. Debited to Cost of Goods Sold.

d. Not recorded at the time.

 

 

93. Good, Inc. sold inventory for $1,200 that was purchased for $700. Good records which of the following when it sells inventory using a perpetual inventory system?

a. No entry is required for cost of goods sold and inventory.

b. Debit Cost of Goods Sold $700; credit Inventory $700.

c. Debit Cost of Goods Sold $1,200; credit Inventory $1,200.

d. Debit Inventory $700; credit Cost of Goods Sold $700.

 

 

94. Davis Hardware Company uses a perpetual inventory system. How should Davis record the sale of inventory costing $620 for $960 on account?

a.

Inventory

620

 

 

      Cost of Goods Sold

 

620

 

Sales Revenue

960

 

 

      Accounts Receivable

 

960

 

 

 

 

b.

Accounts Receivable

960

 

 

      Sales Revenue

 

960

 

Cost of Goods Sold

620

 

 

      Inventory

 

620

 

 

 

 

c.

Inventory

620

 

 

Gain

340

 

 

      Sales Revenue

 

960

 

 

 

 

d.

Accounts Receivable

960

 

 

      Sales Revenues

 

620

 

      Gain

 

340

 

 

              95. Ace Bonding Company purchased inventory on account. The inventory costs $2,000 and is expected to sell for $3,000. How should Ace record the purchase using a perpetual inventory system?

a.

Inventory

2,000

 

 

      Accounts Payable

 

2,000

 

 

 

 

b.

Cost of Goods Sold

2,000

 

 

Unearned Revenue

1,000

 

 

      Sales Revenue

 

3,000

 

 

 

 

c.

Cost of Goods Sold

2,000

 

 

      Accounts Payable

 

2,000

 

 

 

 

d.

Cost of Goods Sold

2,000

 

 

Gain

1,000

 

 

      Accounts Payable

 

3,000

 

 

              96. Merchandise sold FOB destination indicates that:

a. The seller holds title until the merchandise is received at the buyer's location.

b. The merchandise has not yet been shipped.

c. The merchandise will not be shipped until payment has been received.

d. The seller transfers title to the buyer once the merchandise is shipped.

 

 

              97. Merchandise sold FOB shipping point indicates that:

a. The seller holds title until the merchandise is received at the buyer's location.

b. The merchandise has not yet been shipped.

c. The merchandise will not be shipped until payment has been received.

d. The seller transfers title to the buyer once the merchandise is shipped.

 

 

98. If A sells to B, and B obtains title while goods are in transit, the goods were shipped            . If C sells to D, and C maintains title until the goods arrive at D’s door then the goods were shipped _______.

a. FOB shipping point, FOB destination.

b. FOB destination, FOB shipping point.

c. FOB destination, FOB destination.

d. FOB shipping point, FOB shipping point.

 

 

              99. Ending inventory is equal to the cost of items on hand plus:

a. Items in transit sold FOB shipping point.

b. Sales discounts.

c. Items in transit sold FOB destination.

d. Advertising expense.

 

 

100. Suppose Company A places an order with Company B on May 12. On May 14, Company B ships the ordered goods to Company A with terms FOB destination. The goods arrive at Company A on May 17. Company A begins selling the goods to customers on May 19 and pays Company B on May 20. When would Company B record the sale of goods to Company A?

a. May 12.

b. May 14.

c. May 19.

d. May 17.

 

 

101. Niva Company has the following information for its inventories A, B, C, and D:

 

Quantity

Historical Cost

Market Value

A

15

20

25

B

20

35

30

C

40

25

40

D

25

50

35

The necessary adjustment associated with the lower-of-cost-or-market method would be:

a. Inventory675

      Cost of Goods Sold675

 

b. Cost of Goods Sold675

      Inventory675

 

c. Inventory475

      Cost of Goods Sold475

 

d. Cost of Goods Sold475

      Inventory475

Jan 27 2020 View more View Less

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