ACC 290 Week 4 Quiz

Practice Question 50

Correct! This represents cost of goods sold under LIFO:Sale on August 8: 200 × \$5.20* = \$1,040. *\$1,560/300 = \$5.20Sale on August 24: 350 units × \$3.35** = \$1,172.50. **\$1,340/400 = \$3.35Total cost of goods sold = \$2,212.50.

A company just starting business made the following inventory transactions in August:

Purchase on August 1 Sale on August 8 300 units \$1,560 200 units 3,400 400 units 1,340 350 units 5,950

Using the LIFO inventory method, how much is cost of goods sold for August using a perpetual inventory system?

 \$2,120
 \$9,350
 \$2,212.50
 \$6,450

Practice Question 49

Correct! The units that remain in ending inventory are the units from the most recent purchases.(200 ×\$6.30*) + (300 × \$6.60**) = \$3,240; *2,520/400 = \$6.30; **1,980/300 = \$6.60.

August 1 August 12 300 units \$1,560 400 units 2,340 400 units 2,520 300 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?

 \$3,240
 \$2,730
 \$5,670
 \$5,160

Practice Question 48

Correct! FIFO cost of goods sold under a periodic system will be the same as FIFO cost of goods sold under a perpetual system.

Which statement is true in a perpetual inventory system?

 FIFO cost of goods sold will be the same as in a periodic inventory system.
 A new average is computed under the average cost method after each sale.
 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.

Practice Question 43

Correct! Since inventory turnover is a period ratio, average inventory for the period is used.

Inventory turnover is calculated by dividing cost of goods sold by

 365 days.
 beginning inventory.
 ending inventory.
 average inventory.

Practice Question 42

Correct! Days sales in inventory is calculated as 365 days divided by inventory turnover.Inventory turnover = \$960,000 / \$30,000 = 32 timesDays sales in inventory = 365 / 32 = 11.4 days

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?

 2.6
 66.7
 11.4
 12.2

Practice Question 40

Correct! Cost of goods sold is the difference between sales revenue and gross profit:\$1,800,000 – \$600,000 = \$1,200,000Inventory turnover ratio = Cost of goods sold divided by average inventory:\$1,200,000 / [(\$160,000 + \$240,000) / 2] = 6.0.

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?

 3.75 times
 3.0 times
 6.0 times
 2.5 times

Practice Question 39

Correct! Days in inventory equals 365 days ÷ inventory turnover (cost of goods sold ÷ average inventory). 365 ÷ (\$285,000 ÷ [(\$80,000 + \$110,000) ÷ 2]) = 121.7 days

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?

 73 days
 121.7 days
 102.5 days
 84.5 days

Practice Question 30

Correct! LIFO will provide the highest net income during a period of falling prices.

In a period of falling prices, which of the following methods will give the largest net income?

 Specific identification
 Average-cost
 LIFO
 FIFO

Practice Question 28

Correct! FIFO will result in the lowest cost of goods sold, highest net income, and highest income tax expense.

In a period of rising prices which inventory method will result in the greatest amount of income tax expense?

 LIFO
 FIFO
 Specific identification
 Average cost

Practice Question 17

FIFO assumes the cost of the earliest units purchased are the first to be allocated to cost of goods sold.

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 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.
 It assumes that the cost of the earliest units purchased are the first to be allocated to cost of goods sold.

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