MBA 503 Final Examination-

(1.)  The inventory system that uses computer software to keep a running record of inventory on hand is the:

A-     Hybrid inventory system

B-      Periodic inventory system

C-      Costs of goods inventory system

D-     Perpetual inventory system

(2.)  When a LIFO liquidation occurs:

A-     The company must dip into the older layers of inventory cost to compute the cost of goods sold

B-      And prices are rising, newer, higher, costs are shifted into cost of goods sold

C-      Net income decreases

D-     Income taxes decrease

(3.)  Given the following data, calculate the dollar amount of ending inventory using the average cost method. Round ending inventory to the nearest dollar.

Date                             Item                                                         Unit

1/1                               Beginning Inventory                              40 units @ $12 per unit

3/5                               Purchase of Property                            18 units @ $14 per unit

5/30                             Purchase of Inventory                           24 units @ $18 per unit

12/31                           Ending Inventory                                    20 units

A-     $1,419

B-      $852

C-      $1,164

D-     $284

(4.)  The inventory turnover ratio:

A-     Will be lower for companies that have many low-priced items in the inventory.

B-      Shows how many times the company sold its average level of inventory.

C-      Should be high for a company that sells high-priced inventory items.

D-     Is determined by dividing costs of goods sold by net sales.

(5.)  Company B purchased some land and is preparing the land for a new building. Company B should include which of the following in the cost of the land?

A-     Cost of sprinkler system for the shrubbery.

B-      Grading and cleaning the land.

C-      Costs of driveways.

D-     Cost of fencing.