Question : 51.If the market value of inventory greater than its cost, : 1241875

 

 

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.

 

2017

2016

2015

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 2015?

a.$4,713

b.$2,397

c.$81

d.$10,649

 

 

 

57.The following information comes from the annual reports of Devin Designs.

 

2017

2016

2015

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 2015?

a.$4,713

b.$2,409

c.$81

d.$10,583

 

 

58.The following information comes from the annual reports of Devin Designs.

 

2017

2016

2015

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 2016?

a.$2,409

b.$13,570

c.$10,502

d.$8,246

 

 

 

59.The following information comes from the annual reports of Devin Designs.

 

2017

2016

2015

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 2016?

a.$8,246

b.$11,161

c.$13,570

d.$10,643

 

 

 

60.The following information comes from the annual reports of Devin Designs.

 

2017

2016

2015

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 2016?

a.$8,246

b.$11,173

c.$13,570

d.$10,643

 

 

 

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