Chapter 6 Quiz Question 1 Raw materials inventories are the goods that a manufacturing company has completed and are ready to be sold to customers. Question 2 Goods held on consignment should be included in the consignor’s ending inventory Question 3 If a company has no beginning inventory and the unit cost of inventory items does not change during the year, the value assigned to the ending inventory will be the same under LIFO and average cost flow assumptions Question 4 The LIFO method is rarely used because most companies do not sell the last goods they purchase first. Question 5 The FIFO reserve is a required disclosure for companies that use FIFO. Question 6 Manufactured inventory that has begun the production process but is not yet completed is Question 7 Which of the following should not be included in the physical inventory of a company? Question 8 At December 31, 2014 Howell Company’s inventory records indicated a balance of $858,000. Upon further investigation it was determined that this amount included the following: $168,000 in inventory purchases made by Howell shipped from the seller 12/27/14 terms FOB destination, but not due to be received until January 2nd $111,000 in goods sold by Howell with terms FOB destination on December 27th. The goods are not expected to reach their destination until January 6th. $9,000 of goods received on consignment from Westwood Company What is Howell’s correct ending inventory balance at December 31, 2014? Question 9 Noise Makers Inc has the following inventory data: July 1 � � Beginning inventory � 20 units at $19 � $ 380 � 7 � � Purchases � � � � 70 units at $20 � 1,400 22 � � Purchases � � � � 10 units at $22 � 220 � � � � � � � � � � � � � � � � � � $2,000 A physical count of merchandise inventory on July 30 reveals that there are 32 units on hand. Using the average cost method, the value of ending inventory is Question 10 Inventory costing methods place primary reliance on assumptions about the flow of Question 11 Many companies use just-in-time inventory methods. Which of the following is not an advantage of this method? Question 12 Which of the following statements is correct with respect to inventories? Question 13 In periods of rising prices, which is an advantage of using the LIFO inventory costing method? Question 14 Jenks Company developed the following information about its inventories in applying the lower of cost or market (LCM) basis in valuing inventories: Product � � � Cost � � Market � � A � � � � $57,000 � � $60,000 � B � � � � 40,000 � � 38,000 C � � � � 80,000 � � 81,000 If Jenks applies the LCM basis, the value of the inventory reported on the balance sheet would be Question 15 Selection of an inventory costing method by management does not usually depend on Question 16 Which statement concerning lower of cost or market (LCM) is incorrect? Question 17 Use the following information regarding Black Company and Red Company to answer the question “Which of the following is Red Company’s “cost of goods sold” for 2014 (to the closest dollar)?”� Question 18 A low number of days in inventory may indicate all of the following except Question 19 The LIFO reserve is Question 20 Match the items below by entering the appropriate code letter in the space provided.
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