College Acct 1- Chapter 05

Front

The overstatement of the ending inventory balance causes:

Back

Cost of goods sold to be understated and net income to be overstated

Front

In applying the lower of cost or market method to inventory valuation, market is defined as: FIFO, LIFO, Current replacement cost, Current sales price, Historical cost

Back

Current replacement cost

Front

The inventory valuation method that identifies each item in ending inventory with a specific purchase and invoice is the:

Back

Specific identification method

Front

Stuart Co. had cost of goods sold of $4,421 million, ending inventory of $1,089 million, and average inventory of $1,965 million. Its days' sales in inventory equals:

Back

89.9 days

Front

A company's normal selling price for its product is $30 per unit. However, due to market competition, the selling price has fallen to $26 per unit. This company's current inventory consists of 100 units purchased at $25 per unit. Replacement cost has fallen to $23 per unit. Calculate the value of this company's inventory at the lower of cost or market.

Back

$2,300

Front

The inventory turnover ratio is calculated as: Sales / Cost of goods sold, Cost of goods sold / Ending inventory, Cost of goods sold / Ending Inventory * 365, Ending inventory / Cost of goods sold, Cost of goods sold / Average merchandise inventory

Back

Cost of goods sold / Average merchandise inventory

Front

Stuart Co. had cost of goods sold of $5,261 million, ending inventory of $2,172 million, and average inventory of $2,662 million. Its inventory turnover equals:

Back

1.98

Front

During a period of steadily rising costs, the inventory valuation method that yields the highest reported net income is:

Back

FIFO Method

Front

The understatement of the ending inventory balance causes:

Back

Cost of goods sold to be overstated and net income to be understated

Front

The overstatement of the beginning balance causes:

Back

Cost of goods sold to be overstated and net income to be understated