Chapter 6

Which of the following should not be included in the physical inventory of a company

• 1. Goods held on consignment from another

     company.

• 1. Goods shipped on consignment to another

     company.

• 1.  Goods in transit from another company shipped

     FOB shipping point.

• 1. None of the above.

As a result of a thorough physical inventory, Railway Company determined that it had inventory worth $180,000 at December 31, 2017. This count did not take into consideration the following facts: Rogers Consignment store currently has goods worth $35,000

on its sales floor that belong to Railway but are being
sold on consignment by Rogers. The selling price of
these goods is $50,000. Railway purchased $13,000 of goods that were shipped on December 27, FOB desti- nation, that will be received by Railway on January 10. Determine the correct amount of inventory that Rail-

way should report.

• $230,000.

• $215,000.

• $228,000

• 193,000
  

Cost of goods available for sale consists of two elements: beginning inventory and

• ending inventory.

• cost of goods purchased.

• cost of goods sold.

• All of the answer choices are correct.

• $99,000.

• $108,000.

• 113,000.

• $117,000.

Using the data in Question 4 above, the cost of the ending inventory under LIFO is:

• $113,000.

• $108,000.

• $99,000.

• $100,000.

• $84,000.

• $70,000.

• $56,000.

• $75,250.

In periods of rising prices, LIFO will produce:

• higher net income than FIFO.

• the same net income as FIFO.

• lower net income than FIFO.

• higher net income than average-cost.

factors that affect the selection of an inventory cost- ing method do not include

• tax effects.

• balance sheet effects.

• income statement effects.

• perpetual vs. periodic inventory system.

Falk Company’s ending inventory is understated $4,000. The effects of this error on the current year’s cost of goods sold and net income, respectively, are:

• understated, overstated.

• overstated, understated.

• overstated, overstated.

• understated, understated.

Pauline Company overstated its inventory by $15,000 at December 31, 2016. It did not correct the error in 2016 or 2017. As a result, Pauline’s owner’s equity was:

• overstated at December 31, 2016, and understated

  at December 31, 2017.

• overstated at December 31, 2016, and properly

  stated at December 31, 2017.

• understated at December 31, 2016, and under-

  stated at December 31, 2017.

• overstated at December 31, 2016, and overstated

  at December 31, 2017.