Inventory Management MCQs

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A physical inventory count showed an entity had inventory costing $1,000,000 on hand at December 31, Year 1. Excluded from this amount were the follow...






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An entity had the following account balances in the pre-closing trial balance: Opening inventory...................... $100,000 Closing inventory .....






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The following selected data from statements of financial position on December 31, Year 1, and December 31, Year 2, are presented below: ................






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An entity with a December 31 year end purchased $2,000 of inventory on account. The seller was responsible for delivery to the shipping point, with f...






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A retail entity maintains a markup of 25% based on cost. The entity has the following information for the current year: Purchases of merchandise.......






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An entity had the following opening and closing inventory balances during the current year: .......................................1/1 ........12/31 ...






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The following information is available for an entity for the quarter ended March 31, of the current year: Merchandise inventory, as of January 1 of...






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An internal auditor performs an analytical procedure to compare the gross margins of various divisional operations with those of other divisions and ...






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If certain goods owned by an entity were not recorded as a purchase and were not counted in ending inventory, in error, then






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What is the cost of ending inventory given the following factors? Beginning inventory............ $ 5,000 Total production costs ............60,00...






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Holly Company’s inventory is overstated at December 31 of this year. The result will be






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Which one of the following errors will result in the overstatement of net income?






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The following information applies to the income statement of Addison Company: Gross sales....................... $1,000,000 Net sales.................






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An entity started in Year 1 with 200 scented candles on hand at a cost of $3.50 each. These candles sell for $7.00 each. The following schedule repres...






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The cost of materials has risen steadily over the year. Which of the following methods of estimating the ending balance of the materials inventory ac...






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Illustrated below is a perpetual inventory card for the current year. Date......... Units Purchased... Units Sold.... Units .........................






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Illustrated below is a perpetual inventory card for the current year. Date......... Units Purchased... Units Sold.... Units .........................






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An entity has 8,000 units in inventory on January 1, valued at 10 per unit. During the year, the entity sold 25,000 units and purchased inventory as ...






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On January 1, a company has no opening inventory balance. The following purchases are made during the year: .......................Units Purchased.....






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Which inventory pricing method generally approximates current cost for each of the following? Ending Inventory..Cost of Goods Sold






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Which of the following changes in accounting policies resulting from a significant change in the expected pattern of economic benefit will increase p...






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On January 1, a company has no opening inventory balance. The following purchases are made during the year: .......................Units Purchased.....






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The advantage of the last-in, first-out inventory method is based on the assumption that






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Which inventory cost flow method is prohibited according to IFRS?






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The inventory method yielding the same inventory measurement and cost of goods sold whether a perpetual or periodic system is used is






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In a period of rising prices, which one of the following inventory methods usually provides the best matching of expenses against revenues?






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Which one of the following actions would result in a decrease in income?






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In periods of rising costs, which one of the following inventory cash flow assumptions will result in higher cost of sales?






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The weighted average for the year inventory cost flow method is applicable to which of the following inventory systems? Periodic Perpetual






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accounting for inventories, generally accepted accounting principles require departure from the historical cost principle when the utility of invento...






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Based on a physical inventory taken on December 31, Chewy Co. determined its chocolate inventory on a FIFO basis at $26,000 with a replacement cost of...






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The lower-of-cost-or-market rule for inventories may be applied to total inventory, to groups of similar items, or to each item. Which application gen...






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Under the lower-of-cost-or-market method, the replacement cost of an inventory item would be used as the designated market value






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The replacement cost of an inventory item is below the net realizable value and above the net realizable value less the normal profit margin. The ori...






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Which of the following is true regarding inventory adjustments under IFRS?






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During January, Metro Co., which maintains a perpetual inventory system, recorded the following information pertaining to its inventory: ..............






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An entity that prepares its financial statements using IFRS reported the following selected per-unit data relating to work-in-process: Selling price...






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The following data apply to a unit of inventory: Selling price ...................$22 Selling cost...................... 2 Normal profit margin ......






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Lorraine Co. has determined its fiscal year-end inventory on a FIFO basis to be $400,000. Information pertaining to that inventory follows: Estimate...






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Ward Distribution Company has determined its December 31 inventory on a FIFO basis at $200,000. Information pertaining to that inventory follows: Est...






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A company determined the following information for its inventory at the end of an interim period on June 30, Year 2: Historical cost....................






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All of the following would appear on a projected schedule of cost of goods manufactured except for






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A manufacturer of mens t-shirts had the following information for last year. Number of shirts sold and produced.. 125,000 Sale price per shirt.. $4...






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A retail company analyst is comparing North Company to South Company. The analyst notes that receivables for both companies private label credit card...






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The optimal level of inventory is affected by all of the following except the






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Which one of the following would not be considered a carrying cost associated with inventory?






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An example of a carrying cost is






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The carrying costs associated with inventory management include






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The ordering costs associated with inventory management include






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A major supplier has offered Alpha Corporation a year-end special purchase whereby Alpha could purchase 180,000 cases of sport drink at $10 per case. ...






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All of the following are inventory carrying costs except






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The following information regarding inventory policy was assembled by the JRJ Corporation. The company uses a 50-week year in all calculations. Sales...






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The following information regarding inventory policy was assembled by the TKF Corporation. The company uses a 50-week year in all calculations. Sales...






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In inventory management, the safety stock will tend to increase if the






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The level of safety stock in inventory management depends on all of the following except the






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A company serves as a distributor of products by ordering finished products once a quarter and using that inventory to accommodate the demand over the...






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The amount of inventory that a company would tend to hold in safety stock would increase as the






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The result of the economic order quantity (EOQ) formula indicates the






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Edwards Manufacturing Corporation uses the standard economic order quantity (EOQ) model. If the EOQ for Product A is 200 units and Edwards maintains a...






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The economic order quantity for a product is 500 units. However, new orders require 4 working-days lead time during which 80 units will be used. Given...






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When the economic order quantity (EOQ) model is used for a firm that manufactures its inventory, ordering costs consist primarily of






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An inventory management technique designed to minimize inventory investment by having materials arrive at the time they are needed for use is known as...






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All of the following are carrying costs of inventory except






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Valley, Inc., uses 400 lbs. of a rare isotope per year. The isotope costs $500 per lb., but the supplier is offering a quantity discount of 2% for ord...






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A review of the inventories of Cedar Grove Company shows the following cost data for entertainment centers. Invoice price $400.00 per unit Freight ...






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Paint Corporation expects to use 48,000 gallons of paint per year costing $12 per gallon. Inventory carrying cost is equal to 20% of the purchase pric...






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James Smith is the new manager of inventory at American Electronics, a major retailer. He is developing an inventory control system and knows he shoul...






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Carnes Industries uses the economic order quantity (EOQ) model as part of its inventory control program. An increase in which one of the following var...






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Which one of the following is not explicitly considered in the standard calculation of economic order quantity (EOQ)?






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Which one of the following statements concerning the economic order quantity (EOQ) is correct?






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Assume that the following inventory values are determined to be appropriate for Louger Company: Sales 1,000 units Carrying costs 20% of inventory va...






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The basic Economic Order Quantity (EOQ) model includes which of the following assumptions? I. The same fixed quantity is ordered at each reorder poin...






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Per the Codification, what is considered the normal capacity of production facilities?






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How should unallocated fixed overhead costs be treated?






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When manufacturing inventory, what is the accounting treatment for abnormal freight-in costs?






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The weighted-average for the year inventory cost flow method is applicable to which of the following inventory systems? Periodic Perpetual






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Based on a physical inventory taken on December 31, year 2, Chewy Co. determined its chocolate inventory on a FIFO basis at $26,000 with a replaceme...






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Reporting inventory at the lower of cost or market is a departure from the accounting principle of






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The original cost of an inventory item is below both replacement cost and net realizable value. The net realizable value less normal profit margin i...






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Which of the following statements are correct when a company applying the lower of cost or market method reports its inventory at replacement cost? ...






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The original cost of an inventory item is above the replacement cost and the net realizable value. The replacement cost is below the net realizable ...






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On January 1, year 2, Card Corp. signed a three-year noncancelable purchase contract, which allows Card to purchase up to 500,000 units of a compute...






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Thread Co. is selecting its inventory system in preparation for its first year of operations. Thread intends to use either the periodic weighted-ave...






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A company decided to change its inventory valuation method from FIFO to LIFO in a period of rising prices. What was the result of the change on endi...






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Generally, which inventory costing method approximates most closely the current cost for each of the following? Cost of goods sold Ending inventory






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During periods of rising prices, a perpetual inventory system would result in the same dollar amount of ending inventory as a periodic inventory sys...






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Estimates of price-level changes for specific inventories are required for which of the following inventory methods?






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When the double-extension approach to the dollar-value LIFO inventory method is used, the inventory layer added in the current year is multiplied by...






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Jones Wholesalers stocks a changing variety of products. Which inventory costing method will be most likely to give Jones the lowest ending inventor...






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Dart Companys accounting records indicated the following information: Inventory, 1/1/Y2 $ 500,000 Purchases during year 2 2,500,000 Sales during ...






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Herc Co.s inventory at December 31, year 2, was $1,500,000 based on a physical count priced at cost, and before any necessary adjustment for the fo...






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Kew Co.s accounts payable balance at December 31, year 2, was $2,200,000 before considering the following data: Goods shipped to Kew FOB shipping...






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Lewis Companys usual sales terms are net sixty days, FOB shipping point. Sales, net of returns and allowances, totaled $2,300,000 for the year ende...






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On January 1, year 2, Dell, Inc. contracted with the city of Little to provide custom built desks for the city schools. The contract made Dell the c...






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On October 20, year 2, Grimm Co. consigned forty freezers to Holden Co. for sale at $1,000 each and paid $800 in transportation costs. On December 3...






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On December 1, year 2, Alt Department Store received 505 sweaters on consignment from Todd. Todds cost for the sweaters was $80 each, and they were...






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Southgate Co. paid the in-transit insurance premium for consignment goods shipped to Hendon Co., the consignee. In addition, Southgate advanced part...






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Jel Co., a consignee, paid the freight costs for goods shipped from Dale Co., a consignor. These freight costs are to be deducted from Jels payment...






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Jel Co., a consignee, paid the freight costs for goods shipped from Dale Co., a consignor. These freight costs are to be deducted from Jels payment...






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Brady Corporation values its inventory at the lower of cost or net realizable value as required by IFRS. Brady has the following information regardi...