Exam (elaborations)
Accounting 26th Edition Chapter 07 Inventories
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- Chapter 07 Inventories
- Institution
- Chapter 07 Inventories
Chapter 07 Inventories ACCOUNTING 26TH EDITION BY WARREN -TEST BANK
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CHAPTER 7: INVENTORIES1. One of the two internal control procedures over inventory is to properly report inventory on the
financial statements.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.07-01 - 07-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.17 - Inventories Reporting
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
2. A purchase order establishes an initial record of the receipt of the inventory.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.07-01 - 07-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.17 - Inventories Reporting
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
3. A perpetual inventory system is an effective means of control over inventory.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.07-01 - 07-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.17 - Inventories Reporting
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
,Chapter 7: Inventories
4. A subsidiary inventory ledger can be an aid in maintaining inventory levels at their proper levels.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.07-01 - 07-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.17 - Inventories Reporting
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
5. Safeguarding inventory and proper reporting of the inventory in the financial statements are the reasons
for controlling the inventory.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.07-01 - 07-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.17 - Inventories Reporting
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
6. Inventory controls start when the merchandise is shelved in the store area.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.07-01 - 07-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.17 - Inventories Reporting
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
7. A physical inventory should be taken at the end of every month.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.07-01 - 07-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.17 - Inventories Reporting
© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
,Chapter 7: Inventories
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
8. The specific identification inventory method should be used when the inventory consists of identical, low-cost
units that are purchased and sold frequently.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.07-02 - 07-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.17 - Inventories Reporting
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
9. The choice of an inventory costing method has no significant impact on the financial statements.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.07-02 - 07-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.17 - Inventories Reporting
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
10. Of the three widely used inventory costing methods (FIFO, LIFO, and average cost), the LIFO method of
costing inventory assumes costs are charged based on the most recent purchases first.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.07-02 - 07-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.17 - Inventories Reporting
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
, Chapter 7: Inventories
11. When using the FIFO inventory costing method, the most recent costs are assigned to the cost of merchandise sold.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.07-02 - 07-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.17 - Inventories Reporting
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
12. FIFO is the inventory costing method that follows the physical flow of the goods.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.07-02 - 07-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.17 - Inventories Reporting
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
13. Under the LIFO inventory costing method, the most recent costs are assigned to ending inventory.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.07-02 - 07-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.17 - Inventories Reporting
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
14. The weighted average inventory cost flow method is the least used of the inventory costing methods.
a. True
b. False
ANSWER: True
DIFFICULTY: Moderate
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.07-02 - 07-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.17 - Inventories Reporting
© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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