196. Inventory items on an assembly line in various stages of production are classified as
a.finished goods.
b.work in process.
c.raw materials.
d.merchandise inventory.
197. The cost flow method that often parallels the actual physical flow of merchandise is the
a.FIFO method.
b.specific identification method.
c.average-cost method.
d.gross profit method.
UnitsUnit Cost
Inventory, January 110,000$4.50
November 86,0003.50
A physical inventory on December 31 shows 8,000 units on hand. Under the FIFO method, the December 31 inventory is
a.$29,000.
b.$28,000.
c.$32,000.
d.$36,000.
199. In a period of falling prices, the cost flow method that results in the lowest income taxes is the
a.FIFO method.
b.specific identification method.
c.average-cost method.
d.gross profit method.
200. In a period of rising prices, FIFO will have
a.lower net income than average-cost.
b.lower cost of goods sold than average-cost.
c.lower income tax expense than average-cost.
d.lower net purchases than average-cost.
201. Under the LCNRV approach, the net realizable value is defined as
a.FIFO cost.
b.LIFO cost.
c.the net amount that a company expects to realize from a sale.
d.selling price.
202. Euler Company made an inventory count on December 31, 2014. During the count, one of the clerks made the error of counting an inventory item twice. For the statement of financial position at December 31, 2014, the effects of this error are
AssetsLiabilitiesEquity
a.overstatedunderstatedoverstated
b.understatedno effectunderstated
c.overstatedno effectoverstated
d.overstatedoverstatedunderstated
203. The inventory turnover ratio is computed by dividing cost of goods sold by
a.beginning inventory.
b.ending inventory.
c.average inventory.
d.365 days.
Inventory, 1/1? 660,000
Purchases2,700,000
Net sales3,600,000
On December 31, a physical inventory determined that ending inventory of ?720,000 was in the warehouse. Quigley's gross profit on sales has remained constant at 30%. Quigley suspects some of the inventory may have been taken by some new employees. At December 31, what is the estimated cost of missing inventory?
a.?120,000
b.?240,000
c.?360,000
d.?840,000
Answers to Multiple Choice Questions