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1) A company just starting business made the following inventory transactions in August:
Purchase on August 1 | 300 units | $1,560 | ||
Sale on August 8 | 200 units | 3,400 | ||
Purchase on August 12 | 400 units | 1,340 | ||
Sale on August 24 | 350 units | 5,950 |
Using the LIFO inventory method, how much is cost of goods sold for August using a perpetual inventory system?
$6,450 |
$2,120 |
$2,212.50 |
$9,350 |
2) A company just starting business made the following purchases in August:
August 1 | 300 units | $1,560 | ||
August 12 | 400 units | 2,340 | ||
August 24 | 400 units | 2,520 | ||
August 30 | 300 units | 1,980 | ||
| 1,400 units | $8,400 |
A physical count of the inventory on August 31 reveals that there are 500 units on hand. Using the FIFO inventory method in a perpetual inventory system, how much is the value of the ending inventory on August 31?
$5,160 |
$3,240 |
$2,730 |
$5,670 |
3) Which statement is true in a perpetual inventory system?
LIFO cost of goods sold will be the same as in a periodic inventory system. |
Average costs are based entirely on unit-cost simple averages. |
A new average is computed under the average cost method after each sale. |
FIFO cost of goods sold will be the same as in a periodic inventory system. |
4) Inventory turnover is calculated by dividing cost of goods sold by
average inventory. |
365 days. |
beginning inventory. |
ending inventory. |
5) Net sales are $2,000,000, cost of goods sold is $960,000, and average inventory is $30,000. How many days sales are in inventory
12.2 |
66.7 |
2.6 |
11.4 |
6)The following information came from the income statement of the Wilkens Company at December 31, 2017: sales revenue $1,800,000; beginning inventory $160,000; ending inventory $240,000; and gross profit $600,000. What is Wilkens' inventory turnover ratio for 2017?
2.5 times |
3.75 times |
6.0 times |
3.0 times |
7) Carlos Company had beginning inventory of $80,000, ending inventory of $110,000, cost of goods sold of $285,000, and sales revenue of $475,000. What is Carlos’ days in inventory?
121.7 days |
102.5 days |
73 days |
84.5 days |
8) In a period of falling prices, which of the following methods will give the largest net income?
Specific identification |
FIFO |
Average-cost |
LIFO |
9) In a period of rising prices which inventory method will result in the greatest amount of income tax expense?
Specific identification |
LIFO |
FIFO |
Average cost |
10) Which of the following is true of the FIFO inventory method?
It assumes that the cost of the earliest units purchased are the first to be allocated to cost of goods sold. |
It assumes that the cost of the earliest units purchased are the first to be allocated to the ending inventory. |
It assumes that the cost of the earliest units purchased are the last to be allocated to cost of goods sold. |
It assumes that the cost of the earliest units purchased are the last to be allocated to the beginning inventory. |
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