101. Kristin’s Boutiques has identified the following items for possible inclusion in its December 31, 2010 inventory. Which of the following would not be included in the year end inventory?
A. Merchandise purchased FOB shipping point was picked up by the freight company but had still not arrived at Kristin’s Boutique as of December 31, 2010.
B. Kristin has in its warehouse merchandise on consignment from Abby Co.
C. Kristin has sent merchandise to various retailers on a consignment basis.
D. Kristin has merchandise on hand which has been returned by customers because of wrong size.
102. During the taking of its physical inventory on December 31, 2010, Barry’s Bike Shop incorrectly counted its inventory as $270,000 instead of the correct amount of $190,000. The effect on the balance sheet and income statement would be as follows:
A. assets overstated by $80,000; retained earnings understated by $80,000; net income statement understated by $80,000.
B. assets overstated by $80,000; retained earnings understated by $80,000; no effect on the income statement.
C. assets and retained earnings overstated by $80,000; net income overstated by $80,000.
D. assets and retained earnings overstated by $80,000; net income understated by $80,000.
103. If a company mistakenly counts more items during a physical inventory than actually exist, how will the error affect their bottom line?
A. No change to net income.
B. Net income will be overstated
C. Net income will be understated.
D. Only gross profit will be affected.
104. If a company mistakenly counts less items during a physical inventory than actually exist, how will the error affect the cost of merchandise sold?
A. Understated
B. Overstated
C. No change
D. Only inventory is affected
105. Too much inventory on hand
A. reduces solvency
B. increases the cost to safeguard the assets
C. increases the losses due to price declines
D. all of the above
106. Which of the following is used to analyze the efficiency and effectiveness of inventory management?
A. inventory turnover only
B. number of days’ sales in inventory only
C. both inventory turnover and number of days’ sales in inventory
D. neither inventory turnover or number of days’ sales in inventory
107. Which of the following measures the relationship between cost of merchandise sold and the amount of inventory carried during the period?
A. inventory turnover
B. number of days’ sales in inventory
C. retail method of inventory costing
D. gross profit method of inventory costing
108. Which of the following measures the length of time it takes to acquire, sell and replace inventory?
A. inventory turnover
B. number of days’ sales in inventory
C. retail method of inventory costing
D. gross profit method of inventory costing
109. For the year ended December 31, 2011 Depot Max’s cost of merchandise sold was $54,350. Inventory at the beginning of the year was $6,540. Ending inventory was $7,250. Compute Depot Max’s inventory turnover for the year.
A. 8.3
B. 7.5
C. 7.9
D. 47
110. For the year ended December 31, 2011 Depot Max’s cost of merchandise sold was $54,350. Inventory at the beginning of the year was $6,540. Ending inventory was $7,250. Depot Max’s number of days sales in inventory is closest to
A. 43
B. 50
C. 8
D. 47