ACG Exam 2 with all Correct & 100% Verified Answers |
Latest Version |Already Graded A+
In a period of inflation, the costs allocated to ending inventory will approximate their current
cost if
A. the FIFO method is used
B. the LIFO method is used
C. the average method is used
D. all of these ✔Correct Answer-A. the FIFO method is used
In a period of inflation, the inventory cost flow method that results in the lowest income taxes is
the
A. FIFO method
B. LIFO method
C. Average cost method
D. Gross profit method
E. None of these ✔Correct Answer-B. LIFO method
A company has the following inventory data:
July 1 Beginning inventory 10 units at $1 $10
July 7 Purchases 70 units at $2 $140
July 9 Sale 60 units
July 22 Purchases 20 units at $3 $60
July 24 Sale 15 units = $210
Use FIFO and LIFO inventory method and a perpetual inventory system, compute cost of goods
sold and the ending inventory ✔Correct Answer-A. FIFO
July 9: Sold 60 Units:
- 10 x 1 = 10
- 50 x 2 = 100 (July 7 )
- 20 units left over from July 7
July 24: Sold 15 units:
- 15 x 2 = 30 (July 7 unit)
- 5 units left over from July 7
- 20 units left over from July 22
Cost of goods sold: 10 + 100 + 30 = $140
Ending inventory:
- July 7: 5 x 2 = 10
- July 22: 20 x 3 = 60
- 10 + 60 = $70
Cost of goods available for sale: $140 + 70 = $210
, B. LIFO
July 9: Sold 60 units
- 60 x 2 = 120
- 10 units leftover from July 7
- 10 units from beginning inventory
July 24: Sold 15 units
- 15 x 3 = 45
- 10 units leftover from July 7
- 10 units from beginning inventory
- 5 units leftover from July 22
Cost of goods sold: 120 + 45 = $165
Ending inventory:
- 10 x 1 = 10
- 10 x 2 = 20
- 5 x 3 = 15
Cost of goods available for sale: 165 + 45 = 210
A company reports the following:
20X2 20X1
Ending inventory $34,000 $32,000
Cost of goods sold $182,000 $163,500
Sales revenue $240,000 $233,000
What is the company's inventory turnover and its days in inventory for 20X2? ✔Correct
Answer-Inventory turnover: Cost of goods sold/Average inventory
- 182,000 / ((34,000 + 32,000)/2) = 5.5
Days in inventory: 360 x Ending inventory/Cost of goods sold
- 360 x (34000/182,000) = 67.2
A company overstates its ending inventory in the current period. This error results in
A. an understatement of the beginning inventory of the next period
B. no effect on net income of the next period
C. an understatement of net income of the next period
D. an overstatement of the ending inventory of the next period
E. an overstatement of net income of the next period ✔Correct Answer-C. an understatement
of net income of the next period
Understating ending inventory will overstate the following:
A. Assets
B. Net income
C. Stockholders' equity
Latest Version |Already Graded A+
In a period of inflation, the costs allocated to ending inventory will approximate their current
cost if
A. the FIFO method is used
B. the LIFO method is used
C. the average method is used
D. all of these ✔Correct Answer-A. the FIFO method is used
In a period of inflation, the inventory cost flow method that results in the lowest income taxes is
the
A. FIFO method
B. LIFO method
C. Average cost method
D. Gross profit method
E. None of these ✔Correct Answer-B. LIFO method
A company has the following inventory data:
July 1 Beginning inventory 10 units at $1 $10
July 7 Purchases 70 units at $2 $140
July 9 Sale 60 units
July 22 Purchases 20 units at $3 $60
July 24 Sale 15 units = $210
Use FIFO and LIFO inventory method and a perpetual inventory system, compute cost of goods
sold and the ending inventory ✔Correct Answer-A. FIFO
July 9: Sold 60 Units:
- 10 x 1 = 10
- 50 x 2 = 100 (July 7 )
- 20 units left over from July 7
July 24: Sold 15 units:
- 15 x 2 = 30 (July 7 unit)
- 5 units left over from July 7
- 20 units left over from July 22
Cost of goods sold: 10 + 100 + 30 = $140
Ending inventory:
- July 7: 5 x 2 = 10
- July 22: 20 x 3 = 60
- 10 + 60 = $70
Cost of goods available for sale: $140 + 70 = $210
, B. LIFO
July 9: Sold 60 units
- 60 x 2 = 120
- 10 units leftover from July 7
- 10 units from beginning inventory
July 24: Sold 15 units
- 15 x 3 = 45
- 10 units leftover from July 7
- 10 units from beginning inventory
- 5 units leftover from July 22
Cost of goods sold: 120 + 45 = $165
Ending inventory:
- 10 x 1 = 10
- 10 x 2 = 20
- 5 x 3 = 15
Cost of goods available for sale: 165 + 45 = 210
A company reports the following:
20X2 20X1
Ending inventory $34,000 $32,000
Cost of goods sold $182,000 $163,500
Sales revenue $240,000 $233,000
What is the company's inventory turnover and its days in inventory for 20X2? ✔Correct
Answer-Inventory turnover: Cost of goods sold/Average inventory
- 182,000 / ((34,000 + 32,000)/2) = 5.5
Days in inventory: 360 x Ending inventory/Cost of goods sold
- 360 x (34000/182,000) = 67.2
A company overstates its ending inventory in the current period. This error results in
A. an understatement of the beginning inventory of the next period
B. no effect on net income of the next period
C. an understatement of net income of the next period
D. an overstatement of the ending inventory of the next period
E. an overstatement of net income of the next period ✔Correct Answer-C. an understatement
of net income of the next period
Understating ending inventory will overstate the following:
A. Assets
B. Net income
C. Stockholders' equity
