Inventory

Question 1

Cost to Retail Ratio = COST/Retail

Answer 1

Cost = Inventory + Purchases
Retail = Inventory + Purchases + Net Additional Markups

Cost/Retail

Ending Inventory = Inventory + Purchases + Net Additional Markups - Net Markdowns - Sales Revenue

Question 2

COGS = Beginning Inventory + Purchases (when ending inventory is not provided)

Answer 2

True

Question 3

Estimated COGS

Answer 3

= Sales - Gross Profit

Question 4

COGS%

Answer 4

100-Gross Profit %

Question 5

Goods once ACTUALLY SHIPPED means title transferred to the customer. If not, include in vendor’s inventory.

Answer 5

True

Question 6

Dollar Value LIFO

Answer 6

Uses price index

Question 7

NRV or Ceiling =

Answer 7

Selling Price - Cost of disposal

Question 8

Floor Limitation

Answer 8

= NRV - Profit

Question 9

FIFO

Answer 9

Cost of goods sold balance is the same in both perpetual and/or periodic inventory system

Question 10

This method must also be used for financial reporting purposes if used for tax purposes.

Answer 10

LIFO (LFT or left)

Question 11

__________ Method that uses historical sales margins to estimate ending inventory.

Answer 11

Gross Profit

Question 12

GAAP allows the ____________ for interim financial statements or to determine inventory that is destroyed

Answer 12

Gross profit method

Question 13

The operating cycle is Days’ supply in inventory + Avg receivables collection period. Since the inventory turnover increased, as a result, the days’ supply in inventory decreased. The avg receivables collection period remained the same; therefore, there was a decrease in the operating cycle.

Answer 13

True

Question 14

LIFO follows LCM

Answer 14

Lower of Cost or Market (market - middle value)

Question 15

FIFO follows LCNRV

Answer 15

Lower of Cost or NRV

Question 16

Moving Avg is used for Perpetual

Answer 16

True

Question 17

Weighted Avg is used for Periodic

Answer 17

True

Question 18

FIFO - same result for perpetual and periodic inventory

Answer 18

True

Question 19

FIFO

Answer 19

Lowest COGS, Highest Ending Inventory

Question 20

Gross Profit % + COGS % = 100%

Answer 20

True

Question 21

FIFO - Manufacturing situations, manufacturing firm

Answer 21

Most manufacturing operations process and sell inventory in the order it is received, that is the first items in are the first to be sold, which is FIFO.

Question 22

Cost of Sales = Cost of Goods sold

Answer 22

True

Question 23

Consignor (wholesaler) retains ownership. Inventory includes transportation costs. BS reports unsold inventory at year end.

Answer 23

IS - Sales revenue, COGS and selling expenses.

Question 24

Consignee (retailer/dealer) has possession, BS- no inventory reported, reimbursable costs (receivable).

Answer 24

IS - Commission revenue

Question 25

Goods held on consignment are not included by COmpany as they are owned by consignor (not to be included in ending inventory)

Answer 25

True

Question 26

Although ending inventory is $10,000, the amount is included in the $400,000 of inventory purchased. Under cash-basis accounting, inventory is expensed when purchased with cash, therefore, no adjustment is required.

Answer 26

True