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Principles of Accounting Volume 1: Financial Accounting

Mitchell Franklin, Patty Graybeal, Dixon Cooper

Chapter 10

Inventory - all with Video Answers

Educators

Section 1

Describe and Demonstrate the Basic Inventory Valuation Methods and Their Cost Flow Assumptions

05:58

Problem 1

If a company has four lots of products for sale, purchase 1 (earliest) for $17, purchase 2 (middle) for $15, purchase 3 (middle) for $12, and purchase 4 (latest) for $14, which cost would be assumed to be sold first using LIFO costing?
A. $17
B. $15
C. $12
D. $14

Puneet Prajapati
Puneet Prajapati
Numerade Educator
06:52

Problem 2

If a company has three lots of products for sale, purchase 1 (earliest) for $17, purchase 2 (middle) for $15, purchase 3 (latest) for $12, which of the following statements is true?
A. This is an inflationary cost pattern.
B. This is a deflationary cost pattern.
C. The next purchase will cost less than $12.
D. None of these statements can be verified.

Rashmi Sinha
Rashmi Sinha
Numerade Educator
06:35

Problem 3

When inventory items are highly specialized, the best inventory costing method is ________.
A. specific identification
B. first-in, first-out
C. last-in, first-out
D. weighted average

Puneet Prajapati
Puneet Prajapati
Numerade Educator
08:49

Problem 4

If goods are shipped FOB destination, which of the following is true?
A. Title to the goods will transfer as soon as the goods are shipped.
B. FOB indicates that a price reduction has been applied to the order.
C. The seller must pay the shipping.
D. The seller and the buyer will each pay 50% of the cost.

Puneet Prajapati
Puneet Prajapati
Numerade Educator
08:33

Problem 5

On which financial statement would the merchandise inventory account appear?
A. balance sheet
B. income statement
C. both balance sheet and income statement
D. neither balance sheet nor income statement

Puneet Prajapati
Puneet Prajapati
Numerade Educator
09:47

Problem 6

When would using the FIFO inventory costing method produce higher inventory account balances than the LIFO method would?
A. inflationary times
B. deflationary times
C. always
D. never

Puneet Prajapati
Puneet Prajapati
Numerade Educator
08:09

Problem 7

Which accounting rule serves as the primary basis for the lower-of-cost-or-market methodology for inventory valuation?
A. conservatism
B. consistency
C. optimism
D. pessimism

Puneet Prajapati
Puneet Prajapati
Numerade Educator
03:14

Problem 8

Which type or types of inventory timing system (periodic or perpetual) requires the user to record two journal entries every time a sale is made.
A. periodic
B. perpetual
C. both periodic and perpetual
D. neither periodic nor perpetual

Puneet Prajapati
Puneet Prajapati
Numerade Educator