51.If the market value of inventory is greater than its cost, then the application of the lower-of-cost-or-market rule would:
a.decrease both the current ratio and net income.
b.decrease the current ratio but not change net income.
c.not change the current ratio but decrease net income.
d.change neither the current ratio nor net income.
52.During a period of rising prices and inventories, which method causes cash flows to be stronger?
a.FIFO
b.LIFO
c.Averaging
d.The company would be indifferent as to which cost flow assumption is adopted.
53.Which of the following should
not
be included in inventory cost for a car dealership?
a.The costs of transporting the cars from the factory to the dealership
b.Cost of new car preparation for customers
c.The salary and commission of the salesman who sells the vehicle
d.The cost of adding a CD player to the vehicles before the vehicle is offered for sale
54.If the market value of inventory is less than its cost, then application of the lower-of-cost-or-market rule would:
a.increase earnings and decrease the current ratio.
b.decrease earnings and increase the current ratio.
c.decrease earnings and decrease the current ratio.
d.cause no change to earnings or the current ratio.
55.What is the impact on the financial statements of an overstatement of ending inventory?
a.Next year’s ending inventory will be overstated.
b.Next year’s net income will be overstated.
c.Current year’s net income will be overstated.
d.Next year’s ending inventory will be understated.
56.
The following information comes from the annual reports of Devin Designs.
|
2012
|
2011
|
2010
|
Beginning inventory
|
?
|
?
|
2,250
|
Purchases
|
12,652
|
?
|
?
|
Goods available for sale
|
?
|
?
|
12,899
|
Ending inventory
|
?
|
2,662
|
?
|
Cost of goods sold
|
12,213
|
10,908
|
10,490
|
What is the Purchases amount for 2010?
a.$4,713
b.$2,397
c.$81
d.$10,649
57.
The following information comes from the annual reports of Devin Designs.
|
2012
|
2011
|
2010
|
Beginning inventory
|
?
|
?
|
2,250
|
Purchases
|
12,652
|
?
|
?
|
Goods available for sale
|
?
|
?
|
12,899
|
Ending inventory
|
?
|
2,662
|
?
|
Cost of goods sold
|
12,213
|
10,908
|
10,490
|
What is the ending inventory amount for 2010?
a.$4,713
b.$2,409
c.$81
d.$10,583
58.
The following information comes from the annual reports of Devin Designs.
|
2012
|
2011
|
2010
|
Beginning inventory
|
?
|
?
|
2,250
|
Purchases
|
12,652
|
?
|
?
|
Goods available for sale
|
?
|
?
|
12,899
|
Ending inventory
|
?
|
2,662
|
?
|
Cost of goods sold
|
12,213
|
10,908
|
10,490
|
What is the beginning inventory amount for 2011?a. $2,409
b.$13,570
c.$10,502
d.$8,246
59.
The following information comes from the annual reports of Devin Designs.
|
2012
|
2011
|
2010
|
Beginning inventory
|
?
|
?
|
2,250
|
Purchases
|
12,652
|
?
|
?
|
Goods available for sale
|
?
|
?
|
12,899
|
Ending inventory
|
?
|
2,662
|
?
|
Cost of goods sold
|
12,213
|
10,908
|
10,490
|
What is the amount of purchases for 2011?
a.$8,246
b.$11,161
c.$13,570
d.$10,643
60.
The following information comes from the annual reports of Devin Designs.
|
2012
|
2011
|
2010
|
Beginning inventory
|
?
|
?
|
2,250
|
Purchases
|
12,652
|
?
|
?
|
Goods available for sale
|
?
|
?
|
12,899
|
Ending inventory
|
?
|
2,662
|
?
|
Cost of goods sold
|
12,213
|
10,908
|
10,490
|
What is the amount of goods available for sale for 2011?
a.$8,246
b.$11,173
c.$13,570
d.$10,643