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2.
3. The lower of cost and net realisable value rule for inventory is
an example of the principle of:
Answer
a. conservatism
b. consistency
c. historic cost
d. relevancexxxxxxxxxxxx
e. reliability
1 points
Question 2
1.
Question 3
1.
Which of the following statements about the use of the first-in,
first-out (FIFO) assumption is false?
Answer
a. The FIFO assumption assigns the more recent purchase costs
to the balance sheet inventory asset account.
b. Ending inventory valuation using the FIFO assumption is not
affected by the inventory control method used.
c. In periods of rising prices FIFO produces a higher profit
than last-in first-out (LIFO) assumption.
d. The FIFO assumption produces inventory asset values that are
based on older purchase costs.
e. The FIFO assumption is allowed in Australia.
Answer
a. ability to distinguish theft from other sources of inventory
loss
b. availability of details of number of items on hand
c. elimination of inventory shortages
d. lower cost of operation
e. physical count of inventory (i.e., stocktakes) not required
Question 1
1.
The following information relates to Moderate Ltd:
Net Sales: $345,000
Beginning Inventory: $60,000
Ending Inventory: $36,000
Cost of Goods Sold: $210,000
What were the purchases for the period?
Answer
a. $135,000
b. $186,000
c. $234,000
d. $246,000
e. $306,000
1 points
Question 2
1.
Using the periodic inventory control method, entries are made in
the inventory ledger account when inventory is:
Answer
a. delivered
b. paid forxxxxxxxxxxxx
c. returned
d. soldxxxxxxxxxxxxxxxxx
e. none of the above
1 points
Question 3
1.
A company has four products and has 100 units of each in stock. The
cost and net realisable value of each of the products are:
Product V: Cost $10, Net Realisable Value $8
Product X: Cost $8, Net Realisable Value $7
Product Y: Cost $8, Net Realisable Value $9
Product Z: Cost $5, Net Realisable Value $10
The value of inventory in the balance sheet after applying the lower
of cost and net realisable value rule should be:
Answer
a. $1,300
b. $1,500
c. $2,800
d. $3,100
e. $3,400
1 points
Question 4
1.
Which of the following statements about the use of the weighted
average / moving average assumption is true?
Answer
a. The valuation of inventory in the balance sheet is between
that which would be the case with the use of last-in first-out
(LIFO) assumption and the first-in first-out (FIFO)
assumption.
b. When prices are rising, it shows lower balance sheet figures
than the last-in first-out (LIFO) assumption.
c. When prices are falling, it shows lower balance sheet figures
than the first-in first-out (FIFO) assumption.
d. Its use is not permitted in Australia.
e. The valuation of inventory in the balance sheet is unaffected
by the use of either the periodic or perpetual inventory
control methods.
1 points
Question 5
1.
In a period of rising purchase prices, which cost flow assumption
provides the highest net profit?
Answer
a. First-in first-out (FIFO)
b. Last-in first-out (LIFO)
c. Moving / weighted average
d. Specific identification
e. It depends on the rate of inflation
1 points
Question 6
1.
During the year ended 30 June 2010, Rico Ltd has net sales of
$750,000 and net purchases of $440,000. Cost of goods sold was
$475,000. What was Rico Ltd's gross profit for the year ended 30
June 2010?
Answer
a. $240,000
b. $275,000
c. $310,000
d. $475,000
e. $750,000
1 points
Question 7
1.
Which of the following statements about the use of the first-in,
first-out (FIFO) assumption is false?
Answer
a. The FIFO assumption assigns the more recent purchase costs
to the balance sheet inventory asset account.
1 points
Question 8
1.
Harry employs a perpetual inventory system. When a customer returns
merchandise to Harry that was purchased on credit, which of the
following entries would Harry make?
Answer
a. Dr Accounts Receivable; Cr Sales Returns
b. Dr Cash; Cr Accounts Receivable
c. Dr Sales Returns; Cr Cash
d. Dr Sales Returns; Cr Accounts Receivable
e. Dr Sales Returns; Cr Inventory
1 points
Question 9
1.
Which of the following ledger accounts is not found in the ledger
of an enterprise employing the periodic inventory control method?
Answer
a. cost of goods sold
b. discount expense
c. discount revenue
d. purchases
e. purchase returnsxxxxxxxxxxxxxxx
1 points
Question 10
1.
The following lots of a particular commodity were available for sale
during the year:
10 units at $60
Beginning inventory
25 units at $63
First purchase
30 units at $64
Second purchase
15 units at $70
Third purchase
The firm uses the periodic inventory control system and there are
20 units of the commodity on hand at the end of the year. What is
the valuation of inventory at the end of the year using the
first-in first-out assumption?
Answer
a. $1,200
b. $1,230
c. $1,286
d. $1,370
e. $1,400
222222222222222222222222222222222222222
1. A company has four products and has 100 units of each in stock. The
cost and net realisable value of each of the products are:
Product V: Cost $10, Net Realisable Value $8
Product X: Cost $8, Net Realisable Value $7
Product Y: Cost $8, Net Realisable Value $9
Product Z: Cost $5, Net Realisable Value $10
The value of inventory in the balance sheet after applying the lower
of cost and net realisable value rule should be:
Answer
a. $1,300
b. $1,500
c. $2,800
d. $3,100
e. $3,400
1 points
Question 2
1.
Beginning inventory
25 units at $63
First purchase
30 units at $64
Second purchase
15 units at $70
Third purchase
The firm uses the periodic inventory control system and there are
20 units of the commodity on hand at the end of the year. What is
the valuation of inventory at the end of the year using the
first-in first-out assumption?
Answer
a. $1,200
b. $1,230
c. $1,286
d. $1,370
e. $1,400
1 points
Question 3
1.
Which of the following statements about last-in, first-out (LIFO)
assumption is true?
Answer
a. LIFO assumes that inventory on hand consists of the oldest
units.
Question 4
1.
Harry employs a perpetual inventory system. When a customer returns
merchandise to Harry that was purchased on credit, which of the
following entries would Harry make?
Answer
a. Dr Accounts Receivable; Cr Sales Returns
b. Dr Cash; Cr Accounts Receivable
c. Dr Sales Returns; Cr Cash
d. Dr Sales Returns; Cr Accounts Receivable
e. Dr Sales Returns; Cr Inventory
1 points
Question 5
1.
Which of the following statements about the use of the weighted
average / moving average assumption is true?
Answer
a. The valuation of inventory in the balance sheet is between
that which would be the case with the use of last-in first-out
(LIFO) assumption and the first-in first-out (FIFO)
assumption.
b. When prices are rising, it shows lower balance sheet figures
than the last-in first-out (LIFO) assumption.
c. When prices are falling, it shows lower balance sheet figures
than the first-in first-out (FIFO) assumption.
d. Its use is not permitted in Australia.
e. The valuation of inventory in the balance sheet is unaffected
by the use of either the periodic or perpetual inventory
control methods.
1 points
Question 6
1.
In a period of rising purchase prices, which cost flow assumption
provides the highest net profit?
Answer
a. First-in first-out (FIFO)
b. Last-in first-out (LIFO)
c. Moving / weighted average
d. Specific identification
e. It depends on the rate of inflation
1 points
Question 7
1.
Using the periodic inventory control method, entries are made in
the inventory ledger account when inventory is:
Answer
a. delivered
b. paid for
c. returned
d. sold
e. none of the above
1 points
Question 8
1.
The perpetual inventory control method has which of the following
advantages over the periodic control method?
Answer
a. ability to distinguish theft from other sources of inventory
lossxxxxxxx
b. availability of details of number of items on hand
c. elimination of inventory shortages
d. lower cost of operation
e. physical count of inventoryxxxxxxxxxxxx (i.e., stocktakes)
not required
1 points
Question 9
1.
Which of the following statements about the use of the first-in,
first-out (FIFO) assumption is false?
Answer
a. The FIFO assumption assigns the more recent purchase costs
to the balance sheet inventory asset account.
b. Ending inventory valuation using the FIFO assumption is not
affected by the inventory control method used.
c. In periods of rising prices FIFO produces a higher profit
than last-in first-out (LIFO) assumption.
d. The FIFO assumption produces inventory asset values that are
based on older purchase costs.
e. The FIFO assumption is allowed in Australia.
1 points
Question 10
1.
The following information relates to Moderate Ltd:
Net Sales: $345,000
Beginning Inventory: $60,000
Ending Inventory: $36,000
Cost of Goods Sold: $210,000
What were the purchases for the period?
Answer
a. $135,000
b. $186,000
c. $234,000
d. $246,000
e. $306,000
1 points
Question 2
1.
The perpetual inventory control method has which of
the following advantages over the periodic control
method?
Answer
a. ability to distinguish theft from other
sources of inventory loss
b. availability of details of number of items on
hand
c. elimination of inventory shortages
d. lower cost of operation
e. physical count of inventory (i.e., stocktakes)
not required
1 points
Question 3
1.
Using the periodic inventory control method, entries
are made in the inventory ledger account when
inventory is:
Answer
a. delivered
b. paid for
c. returned
d. sold
1 points
Question 4
1.
Which of the following statements about last-in,
first-out (LIFO) assumption is true?
Answer
a. LIFO assumes that inventory on hand consists
of the oldest units.
b. LIFO assumes that ending inventory and cost of
goods sold are comprised of a mixture of old
and new units.
c. LIFO results in newer costs appearing in the
balance sheet.
d. LIFO assumes that cost of goods sold consists
of the oldest units.
e. LIFO results in the same ending inventory
valuation irrespective of whether a periodic
or perpetual control method is used.
1 points
Question 5
1.
Which of the following statements about the use of the
first-in, first-out (FIFO) assumption is false?
Answer
a. The FIFO assumption assigns the more recent
purchase costs to the balance sheet inventory
asset account.
1 points
Question 6
1.
The following information relates to Moderate Ltd:
Net Sales: $345,000
Beginning Inventory: $60,000
Ending Inventory: $36,000
Cost of Goods Sold: $210,000
What were the purchases for the period?
Answer
a. $135,000
b. $186,000
c. $234,000
d. $246,000
e. $306,000
1 points
Question 7
1.
Which of the following ledger accounts is not found
in the ledger of an enterprise employing the periodic
inventory control method?
Answer
a. cost of goods sold
b. discount expense
c. discount revenue
d. purchases
e. purchase returns
1 points
Question 8
1.
The lower of cost and net realisable value rule for
inventory is an example of the principle of:
Answer
a. conservatism
b. consistency
c. historic cost
d. relevance
e. reliability
1 points
Question 9
1.
Harry employs a perpetual inventory system. When a
customer returns merchandise to Harry that was
purchased on credit, which of the following entries
would Harry make?
Answer
a. Dr Accounts Receivable; Cr Sales Returns
b. Dr Cash; Cr Accounts Receivable
c. Dr Sales Returns; Cr Cash
d. Dr Sales Returns; Cr Accounts Receivable
e. Dr Sales Returns; Cr Inventory
1 points
Question 10
1.
The following lots of a particular commodity were
available for sale during the year:
10 units at $60
Beginning inventory
25 units at $63
First purchase
30 units at $64
Second purchase
15 units at $70
Third purchase
1 points