POA Study Guide Exam #3

Goods in transit are included in a purchaser's inventory:

• At any time during transit.

• When the goods are shipped FOB shipping point.

• When the supplier is responsible for freight charges.

• If the goods are shipped FOB destination.

• After the half-way point between the buyer and seller.

Regardless of the inventory costing system used, cost of goods available for sale must be allocated at the end of the period between:

• beginning inventory and net purchases during the period.

• ending inventory and beginning inventory.

• net purchases during the period and ending inventory.

• ending inventory and cost of goods sold.

• beginning inventory and cost of goods sold.

On December 31 of the current year, Plunkett Company reported an ending inventory balance of $220,000. The following additional information is also available:

• Plunkett sold and shipped goods costing $39,000 to Savannah Enterprises on December 28 with shipping terms of FOB shipping point. The goods were not included in the ending inventory amount of $220,000.

• Plunkett purchased goods costing $45,000 on December 29. The goods were shipped FOB destination and were received by Plunkett on January 2 of the following year. The shipment was a rush order that was supposed to arrive by December 31. These goods were included in the ending inventory balance of $220,000.

• Plunkett's ending inventory balance of $220,000 included $16,000 of goods being held on consignment from Carole Company. (Plunkett Company is the consignee.)

• Plunkett's ending inventory balance of $220,000 did not include goods costing $96,000 that were shipped to Plunkett on December 27 with shipping terms of FOB destination and were still in transit at year-end.

Based on the above information, the amount that Plunkett should report in ending inventory on December 31 is:

• $198,000

• $214,000

• $204,000

• $175,000

• $159,000

When purchase costs regularly rise, the inventory costing method that yields the highest reported net income is:

• specific identification method

• average cost method

• weighted-average method

• FIFO method

• LIFO method

The selected inventory costing method impacts:

• gross profit and net income

• sales

• the physical flow of goods

• the quantity of inventory items on hand

• the shipping terms to the buyer

Ace Company reported the following information for the current year:

The beginning inventory balance is correct. However, the ending inventory figure was overstated by $24,000. Given this information, the correct gross profit would be:

• $123,000

• $147,000

• $171,000

• $136,000

• $114,000

A company's inventory records indicate the following data for the month of April:

The company uses a periodic inventory system. Determine the cost assigned to ending inventory using the specific identification method. Ending inventory consists of 270 units from the April 16 purchase, 80 units from the April 7 purchase, and 100 units from beginning inventory.

• $22,460

• $18,680

• $22,980

• $30,560

• $36,050

A company's inventory records indicate the following data for the month of January:

If the company uses the LIFO perpetual inventory system, what would be the cost of the ending inventory?

• $7,480

• $17,840

• $15,920

• $21,160

• $22,000

A company's inventory records indicate the following data for the month of January:

If the company uses the LIFO periodic inventory system, what would be the cost of the ending inventory?

• $6,600

• $15,040

• $12,480

• $18,080

• $20,640

The principle of internal control include:

• Separate recordkeeping from custody of assets.

• Maintain minimal records.

• Use only computerized systems.

• Bond all employees.

• Require automated sales systems.