Question : Multiple Choice Questions 58.In periods of rising prices, the inventory valuation : 1169023

 

Multiple Choice Questions 

58.In periods of rising prices, the inventory valuation procedure that results in the highest net income is   

A. the lower of cost or market method.

 

B. the LIFO method.

 

C. the average cost method.

 

D. the FIFO method.

 

 

 

 

59.If other items remain the same, the larger the ending inventory valuation, the   

A. higher the cost of goods sold.

 

B. higher the reported net income.

 

C. lower the reported gross profit on sales.

 

D. lower the reported net income.

 

 

 

 

60.A firm that sells a single product had a beginning inventory of 4,000 units with a total cost of $28,000. Early in the year, 10,000 units were purchased at $9 each. Using FIFO, what is the value of the ending inventory of 3,000 units?   

A. $27,000

 

B. $24,000

 

C. $21,000

 

D. $36,000

 

 

 

61.A firm that sells a single product had a beginning inventory of 4,000 units with a total cost of $16,000. Early in the year, 8,000 units were purchased at $6 each. Using LIFO, what is the value of the ending inventory of 2,000 units?   

A. $12,000

 

B. $10,000

 

C. $8,000

 

D. $24,000

 

 

 

62.Which of the following inventory costing procedures requires a physical count of merchandise a minimum of once a year at yearend?   

A. the retail method

 

B. the average cost method

 

C. the gross profit method

 

D. the lower of cost or market method

 

 

 

 

63.The inventory valuation method which tends to smooth out periodic fluctuations in cost is:   

A. the LIFO method

 

B. the weighted average cost method

 

C. the FIFO method

 

D. the specific identification method

 

 

 

 

64.Which inventory valuation method mimics the actual flow of goods for most businesses?   

A. the specific identification method

 

B. the average cost method

 

C. the FIFO method

 

D. the LIFO method

 

 

 

 

65.Inventory valuation methods acceptable internationally include all of the following except:   

A. Specific identification

 

B. Weighted average

 

C. FIFO

 

D. LIFO

 

 

 

 

66.The gross profit method of determining ending inventory cost   

A. can be used without taking a physical count of merchandise.

 

B. provides accurate information about the number of units in inventory.

 

C. requires that a firm keep inventory and purchases data at retail value as well as at cost.

 

D. requires that the inventory be classified into groups of items of about the same rate of markon.

 

 

 

 

67.The accountant for a company whose inventory was destroyed by fire determined from undamaged records that the cost of goods available for sale was $100,000 and the net sales were $80,000 up to the date of the fire. The accountant also determined that the company’s normal gross profit rate is 40 percent of net sales. From this data, the accountant estimated the cost of the inventory destroyed by the fire to be   

A. $60,000.

 

B. $52,000.

 

C. $32,000.

 

D. $20,000.