Question :
43. A firm that sells a single product had a beginning : 1197624
43. 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
44. The modifying convention of conservatism requires that inventory be presented on the balance sheet at
A. cost.
B. market value.
C. either cost or market value, whichever is lower.
D. average cost during the period.
45. The Lower of Cost or Market rule is based on which accounting principle?
A. conservatism
B. revenue recognition
C. matching
D. full disclosure
46. The price a business would pay for its inventory is
A. assessed value.
B. sales price.
C. replacement cost.
D. discount price.
47. Which of the following is NOT a way to apply the lower of cost or market rule?
A. by item
B. by size
C. in total
D. by group
48. If a business builds and sells yachts. The logical method for inventory costing is
A. LIFO.
B. average cost method.
C. specific identification method.
D. FIFO.
49. The steps and proper order for estimating EI cost using the gross profit method are as follows:
A. determine COGA, estimate COGS, subtract COGS from COGA.
B. determine COGA, estimate COGS, subtract COGA from COGS.
C. estimate COGS, determine COGA, subtract COGA from COGS.
D. estimate COGS, determine COGA, subtract COGS from COGA.
50. An assumption necessary to the use of the Gross Profit method is that the
A. Gross Profit amount is constant from period to period.
B. inventory level remains constant.
C. the rate of Gross Profit is constant from period to period.
D. the Gross Profit percentage increases at the rate of inflation.
51. 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 mark on.
52. 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.
53. The merchandise available for sale cost a company $90,000 and was marked to sell at a retail price of $125,000. Sales during the period totaled $80,000. If the retail method is used, the estimated cost of the ending inventory is
A. $32,400.
B. $12,600.
C. $22,400.
D. $45,000.
54. The retail method is a means of estimating
A. selling price.
B. beginning inventory cost.
C. retail price of inventory.
D. ending inventory cost.
55. Cost ratio is calculated by
A. dividing merchandise available for sale at cost by merchandise available for sale at retail.
B. dividing merchandise available for sale at retail by merchandise available for sale at cost.
C. dividing net retail sales by the cost of the merchandise sold.
D. dividing the cost of merchandise sold by net retail sales.
56. An increase above the initial retail price of merchandise is
A. net profit.
B. gross profit.
C. markup.
D. markon.
57. The difference between the cost and the initial retail price of merchandise is
A. markup.
B. markon.
C. markdown.
D. market price.
