Question : 111. Using either the FIFO and LIFO cost flow assumption will : 1246012

 

 

111. Using either the FIFO and LIFO cost flow assumption will result in the same cost of goods sold when A. the number of units in beginning and ending inventory are the same.B. two consecutive years are combined.C. the prices of the goods do not change.D. lower-of-cost-or-market is applied.E. none of the above

 

112. Which of the following cost flow assumptions will report ending inventory closest to current cost? A. LIFO methodB. FIFO methodC. weighted-average methodD. acquisition costE. specific identification method

 

113. LIFO inventory layers A. occur when ending inventory is less than beginning inventory.B. are liquidated when ending inventory exceeds beginning inventory.C. are created in years in which inventory purchases exceed sales.D. must be disclosed in the annual report.E. none of the above

 

114. In a time of rising prices, unrealized holding gains on ending inventory are A. higher under LIFO than FIFO.B. higher under FIFO than LIFO.C. reported on the income statement.D. required to be reported in notes to the financial statements.E. none of the above

 

115. The U.S. GAAP requires firms using LIFO to disclose in notes to the financial statements A. the amounts by which inventories based on FIFO or current cost exceed their amounts as reported on a LIFO basis.B. the amounts by which inventories based on LIFO exceed their amounts as reported on a FIFO or current cost basis.C. the amounts by which inventories based on LIFO exceed their amounts as reported on a specific identification or current cost basis.D. the amounts by which inventories based on specific identification or current cost exceed their amounts as reported on a LIFO basis.E. none of the above

 

116. Fix-It HardwareFix-It Hardware began the month of November with 150 large brass switchplates on hand at a cost of $4.00 each. These switchplates sell for $7.00 each. The following schedule presents the sales and purchases of this item during the month of November. 

 

Purchases

 

Date of Transaction

Quantity Received

Unit Cost

Units Sold

November 5

 

 

100

November 7

200

$4.20

 

November 9

 

 

150

November 11

200

4.40

 

November 17

 

 

220

November 22

250

4.80

 

November 29

 

 

100

 

 

 

 

(CMA adapted, Dec 92 #25) Refer to the Fix-It Hardware example. If Fix-It uses FIFO inventory pricing, the value of the inventory on November 30 would be A. $936B. $1,046C. $1,076D. $1,104E. $1,204

 

117. Fix-It HardwareFix-It Hardware began the month of November with 150 large brass switchplates on hand at a cost of $4.00 each. These switchplates sell for $7.00 each. The following schedule presents the sales and purchases of this item during the month of November. 

 

Purchases

 

Date of Transaction

Quantity Received

Unit Cost

Units Sold

November 5

 

 

100

November 7

200

$4.20

 

November 9

 

 

150

November 11

200

4.40

 

November 17

 

 

220

November 22

250

4.80

 

November 29

 

 

100

 

 

 

 

(CMA adapted, Dec 92 #27) Refer to the Fix-It Hardware example. If Fix-It uses weighted average inventory pricing, the gross profit for November would be A. $1,046B. $1,482 C. $1,516D. $1,574E. $1,146

 

118. Fix-It HardwareFix-It Hardware began the month of November with 150 large brass switchplates on hand at a cost of $4.00 each. These switchplates sell for $7.00 each. The following schedule presents the sales and purchases of this item during the month of November. 

 

Purchases

 

Date of Transaction

Quantity Received

Unit Cost

Units Sold

November 5

 

 

100

November 7

200

$4.20

 

November 9

 

 

150

November 11

200

4.40

 

November 17

 

 

220

November 22

250

4.80

 

November 29

 

 

100

 

 

 

 

Refer to the Fix-It Hardware example. A growing firm is contemplating switching from a FIFO to a LIFO cost flow assumption for inventories and cost of goods sold because it has recently experienced increasing manufacturing costs for its products and anticipates a prolonged period of increasing quantities and manufacturing costs in the future. The firm wishes to know which of the following statements about the effect of the switch to LIFO is/are correct, relative to remaining on FIFO (ignore income tax effects): A. the current ratio will be higher.B. the inventory turnover will be lower.C. the cost of goods sold to sales percentage will be lower.D. all of the above.E. none of the above.

 

119. Fix-It HardwareFix-It Hardware began the month of November with 150 large brass switchplates on hand at a cost of $4.00 each. These switchplates sell for $7.00 each. The following schedule presents the sales and purchases of this item during the month of November. 

 

Purchases

 

Date of Transaction

Quantity Received

Unit Cost

Units Sold

November 5

 

 

100

November 7

200

$4.20

 

November 9

 

 

150

November 11

200

4.40

 

November 17

 

 

220

November 22

250

4.80

 

November 29

 

 

100

 

 

 

 

(CMA adapted, Dec 92 #28) Refer to the Fix-It Hardware example. If Fix-It uses (periodic) LIFO inventory pricing, the cost of goods sold for November would be A. $2,416B. $2,474C. $2,508D. $2,584E. $2,684

 

120. Inventory RecordThe inventory record for a particular item for Year 2 appears below. 

Inventory, January 1, Year 2

20,000

$0.20

$4,000

Purchases:

 

 

 

March 2

4,000

.24

$   960

April 30

3,000

.28

840

June 15

6,000

.32

1,920

September 30

2,000

.26

520

December 15

1,000

.20

200

Total purchases

16,000

 

$4,440

Total available for sale

36,000

 

$8,440

Units sold

28,000

 

 

 

 

 

 

Refer to the Inventory Record example. The cost of goods sold for year 2 under FIFO is: A. $6,040B. $6,120 C. $6,320D. $6,520E. $6,840

 

 

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