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ACC 101 Exam 3 || with Complete Solutions.
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Inventories Effect correct answers both the balance sheet and the income statement Legal Title correct answers The factor which determines wether or not goods should be included in a physical count of inventory is If goods in transit are shipped FOB destination correct answers the seller has ...

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  • August 9, 2024
  • 7
  • 2024/2025
  • Exam (elaborations)
  • Questions & answers

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ACC 101 Exam 3 || with Complete Solutions.
Inventories Effect correct answers both the balance sheet and the income statement

Legal Title correct answers The factor which determines wether or not goods should be included
in a physical count of inventory is

If goods in transit are shipped FOB destination correct answers the seller has legal title to the
goods until they are delivered

Which of the following should be included in the physical inventory of a company correct
answers Goods held on consignment from another company

Freight terms of FOB shipping point mean that the correct answers buyer must bear the freight
cost

For companies that use a perpetual inventory system, all of the following are purposes for taking
a physical inventory except correct answers to determine ownership of the goods

The term "FOB" denotes correct answers free on board

Under a consignment arrangement, the correct answers cosignor has ownership until goods are
sold to the customer

Inventoriable costs include all of the following except the correct answers costs of the purchasing
and warehousing departments

Beginning inventory plus the cost of goods purchased equals correct answers cost of goods
available for sale

Cost of goods sold is computed from the following equation correct answers beginning inventory
+ cost of goods purchased - ending inventory

The LIFO inventory method assumes that the cost of the latest units purchased are correct
answers the first to be allocated to costs of goods sold

The cost of goods available for sale is allocated between correct answers ending inventory and
costs of goods sold

if a company changes its inventory valuation method, the effect of the change on net income
should be disclosed in the financial statements correct answers TRUE

An error that overstates the ending inventory will also cause net income for the period to be
overstated correct answers FALSE

, If inventoried are valued using the LIFO cost assumption, they should not be classified as a
current asset on the balance sheet correct answers FALSE

Under the lower-of-cost-market basis, market is defined as current replacement cost correct
answers TRUE

Accountants believe that the write down from cost to market should not be made in the period
which the price decline occurs correct answers FALSE

Inventory turnover is calculated as cost of goods sold divided by ending inventory correct
answers FALSE

Finished goods are a classification of inventory for a manufacturer that are completed and ready
for sale correct answers TRUE

Under the FIFO method, the costs of the earliest units purchased are the first charged to cost of
goods sold correct answers TRUE

The cost of goods available for sale consists of the beginning inventory plus the cost of goods
purchased correct answers TRUE

The lower-of-cost-or-market basis is an example of the accounting concept of conservatism
correct answers TRUE

Inventories are reported in the current asset section of the balance sheet immediately below
receivables correct answers TRUE

The accounting principle that requires that the cost flow assumption be consistent with the
physical movement of goods is correct answers nonexistent; that is, there is no accounting
requirement

Which of the following statements is correct with respect to inventories? correct answers Under
FIFO, the ending inventory is based on the latest units purchased

In a period of increasing prices, which inventory flow assumption will result in the lowest
amount of income tax expense? correct answers LIFO

The specific identification method of costing inventories is used when the correct answers
company sells a limited quantity of high-unit cost items

Inventory is reported in the financial statements at correct answers the lower-of-cost-or-market

The lower-of-cost-or-market basis of valuing inventories is an example of correct answers
Conservatism

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