Question :
51.During periods of inflation, which method will yield the smallest : 1237680
51.During periods of inflation, which method will yield the smallest ending inventory and the largest cost of goods sold?
A. LIFO.
B. FIFO.
C. Average cost.
D. Specific identification.
52.In a period of rising prices, a company is most likely to use the FIFO method of pricing inventory if:
A. Each item in the inventory is unique.
B. Management wants the same unit cost assigned to items sold and items remaining in inventory.
C. Management’s primary objective is to minimize income taxes.
D. Management wants the company’s income statement to indicate the highest possible amounts of gross profit and net income.
53.Which of the following inventory approaches is not in accord with the physical flow of merchandise in most businesses?
A. LIFO.
B. FIFO.
C. Specific identification.
D. Average cost.
54.A store that sells expensive custom-made jewelry is most likely to determine its cost of goods sold using:
A. Specific identification.
B. Average cost.
C. First-in, first-out.
D. Last-in, last-out.
55.The choice of inventory valuation method can help achieve each of the following independent goals, except:
A. Reduce cost of merchandise acquired from suppliers.
B. Increase reported net income.
C. Increase the inventory turnover rate.
D. Reduce the amount of income taxes owed.
56.With respect to the valuation of inventory and measurement of the cost of goods sold, the principle of consistency means that the same method should be applied:
A. In successive accounting periods.
B. By all companies in a given industry.
C. To all products in the inventory.
D. In financial statements and income tax returns.
57.In a manufacturing company, the “just-in-time” concept of inventory management is best illustrated by:
A. Receiving deliveries of materials from suppliers just before the materials are used in the production process.
B. Completing the manufacturing process just before the deadline established by the customer.
C. An automated factory that reduces production time below that of other companies in the industry.
D. Selling finished products before they go out of style.
58.The “just-in-time” concept of inventory management is best illustrated by:
A. A clothing manufacturer that sells all of its finished goods before they go out of style.
B. A defense contractor that completes its projects within the deadlines set by its customer (the federal government).
C. A pharmaceutical firm that consistently brings new products to market ahead of its competitors.
D. A homebuilder who has its suppliers deliver lumber and other building materials to the building site the night before these materials will be used by the company’s construction crews.
59.The primary advantage of a just-in-time inventory system is:
A. The amount of money tied up in inventory is minimized.
B. Customers are afforded a wider selection of merchandise available for immediate delivery.
C. The company is able to use the specific identification method of inventory pricing.
D. The risks of losing sales opportunities or of having to shut down manufacturing operations because of inventory shortages are minimized.
60.The principle of consistency states that:
A. Companies are prohibited from ever changing their accounting methods.
B. Every company in the same industry must use the same accounting principle.
C. There must be a consistent blend to the accounting principles.
D. If changes in accounting principles are made, the reasons for the change and the effects on the company’s net income must be disclosed.
