Question 33 of 50

Which of the following costs is most likely to be capitalized as inventory?

A manufacturing firm incurs the following costs: Raw materials 50,000; Conversion costs 30,000; Freight to customers 2,000; Abnormal waste 1,000. What amount should be capitalized in inventory?

Under IFRS, which inventory cost flow method is prohibited?

In an inflationary environment with stable inventory quantities, which cost flow method results in the highest Cost of Goods Sold (COGS)?

A company starts with 0 inventory. It purchases 10 units at 5 dollars each, then 10 units at 6 dollars each. It sells 15 units. Using the FIFO method, what is the Cost of Goods Sold?

Using the same data: Purchases of 10 units at 5 dollars and 10 units at 6 dollars. Sales of 15 units. Using the LIFO method, what is the Ending Inventory value?

Which inventory method provides the best approximation of current cost on the balance sheet?

In a period of rising prices, a firm using LIFO will report:

Which inventory system requires a Purchases account and determines COGS only at the end of the accounting period?

For which cost flow method are the results for Ending Inventory and COGS identical under both periodic and perpetual inventory systems?

A company reports LIFO Inventory of 200,000 and a LIFO Reserve of 30,000. What is the value of FIFO Inventory?

A firm's LIFO Reserve increased from 10,000 at the beginning of the year to 15,000 at the end of the year. If LIFO COGS was 100,000, what is the FIFO COGS?

To convert a LIFO balance sheet to FIFO, an analyst should increase Shareholders' Equity by:

During a period of declining prices (deflation), which inventory method will result in the highest Gross Profit?

A LIFO liquidation occurs when:

Under IFRS, inventory is reported on the balance sheet at the lower of cost or:

Net Realizable Value (NRV) is defined as:

An item has a cost of 50, an estimated selling price of 60, and selling costs of 5. Under IFRS, what is the balance sheet value?

Under U.S. GAAP, 'Market' is usually replacement cost, but it cannot exceed:

Under U.S. GAAP, if an inventory write-down occurs, where is the loss typically recognized?

Which of the following regarding inventory write-down reversals is correct?

A write-down of inventory to net realizable value will have what effect on the current ratio?

Inventory Turnover is calculated as:

Days of inventory on hand is calculated as:

If a company has a LIFO Reserve of 20,000 and a tax rate of 25%, by how much should cash be adjusted to convert the balance sheet to FIFO?

In a period of rising prices, compared to FIFO, LIFO results in:

Which industry typically uses the Specific Identification method?

A firm purchases inventory for 100. It receives a trade discount of 5 and pays freight-in of 10. What is the cost of the inventory?

Generally, high inventory turnover is desirable, but if it is too high relative to the industry, it might indicate:

A company uses LIFO. Its beginning inventory was 200 units @ 10 dollars. It purchases 300 units @ 15 dollars. It sells 250 units. What is the COGS?

Using the same data (Beg: 200 @ 10; Purch: 300 @ 15; Sold: 250), what is the Ending Inventory under LIFO?

The LIFO Conformity Rule in the U.S. requires that:

Commodity producers may report inventory above historical cost at:

If a firm changes its inventory method from FIFO to Weighted Average, this change is generally handled:

An exception to retrospective application of inventory method changes occurs when a firm changes to:

A U.S. GAAP firm has inventory with a cost of 100, replacement cost of 95, NRV of 105, and NRV less normal profit margin of 98. What is the balance sheet value?

Using the data: Cost 100, Market 98. The firm writes down inventory. The write-down amount is:

A LIFO liquidation results in profits that are:

Which ratio measures the liquidity of inventory?

In calculating the Inventory Turnover ratio for a firm using LIFO, analysts often adjust the denominator by:

A company reports COGS of 1,000, Beginning Inventory of 200, and Ending Inventory of 300. What is the Inventory Turnover ratio?

A high Days of Inventory on Hand compared to the industry average suggests:

When prices are falling (deflation) and inventory quantities are stable, LIFO results in:

Which accounting disclosure is most useful for comparing firms using LIFO to firms using FIFO?

If a firm writes down inventory, the immediate effect on the Debt-to-Equity ratio is:

Inventory disclosures typically include carrying amounts by classification. Which classification is commonly used?

An analyst observes that Finished Goods inventory is growing faster than Sales. This most likely indicates:

What is the primary motivation for U.S. firms to choose LIFO?

If ending inventory is overstated in the current year, what is the effect on the next year's Net Income?