Study Guide Intermediate Accounting Volume 2 Chapters 15-24 14th Edition Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield - Solutions

(S.O. 2) Recording inventory at net realizable is permitted, even if it is above cost, when there are no significant costs of disposal involved and: oe eee ee A. the ending inventory is determined by a physical inventory count.B. a normal profit is not anticipated.es there is ac ith a quoted price
(S.O. 1) The fact that ita icsc epted practice to recognize decreases in the value of inventory prior to the point of sale, but not increases, is an illustration of which one of the following accounting concepts? aa A. Objectivity.B. Conservatism.C, Materiality.D. Consistency.
(S.O. 1) When recording market value instead of cost for ending inventory, the method which allows identification of inventory cost on the balance sheet is:eee es ee ee Direct Indirect Method Method A. No Yes B. No No C. YES No IBF Yes Nes
(S.O. 1) When the direct method is used to record inventory at market:=AN there is a direct reduction in the selling price of the product that results in a loss being recorded on the income statement prior to the sale.B. a loss is recorded directly in the inventory account by crediting inventory
(S.O. 1) Under the lower-of-cost-or-market-rule, market will be replacement cost except when replacement cost is: pad Mele irene eter tastes sd aie A. higher than cost. WV B. less than net realizable value.C. less than net realizable value less a normal profit margin.D. less than cost.
(S.O. 1) Martinez Corporation has two products in its ending inventory. A profit margin of 30% on selling price is considered normal for each product. Specific data with respect to each product follows:Product A Product B Historical cost $22.00 $ 55.00 Replacement cost 20.00 56.00 Estimated cost to
(S.O. 1) Let A equal the reported inventory value if the lower-of-cost-or-market rule is applied to individual items of inventory; B equals the reported inventory value if the lower of cost or market rule is applied to the inventory as a whole. Which of the following best describes the relationship
(S.O. 1) Ifa unit of inventory has declined in value below original cost, and the market value is less than the net realizable value less a normal profit margin, the amount to be used for purposes of inventory valuation is:original cost.market value.net realizable value.net realizable value less a
(S.O.1) A dudad has an original cost of $15 and a replacement cost of $12. The cost of completion and disposal is $2. If the dudad has a net realizable value of $16 and a normal profit margin of $5, its inventory value should be:A. $15.B: $12.Cc $16.D. $14.
(S.O. 1) When using the lower-of-cost-or-market method, what is the meaning of "market"?A. Discounted present value.Iie Net realizable value.C. Current replacement cost.1B Net realizable value less a normal profit margin.
(S.O. 1) Replacement cost is the designated market value used to compare to cost in determining lower of cost or market when its relationship to the items shown below is:Net NRYV less Realizable Value Normal Profit A. Lower Higher .B. Higher Higher Ny C. Higher Lower by D. Lower Lower
(S.O. 1) Which of the following represents the best justification for the departure from the historical cost principle that results when lower of cost or market is used?A. It is easier to keep track of market value than it is to keep track of cost as market value is available from any supplier.B.
(S.O. 8) A major assumption of the LIFO retail method is that the markups and markdowns apply only to the goods purchased during the current period, not to the beginning inventory.
(S.O. 7) The basis upon which inventory amounts are stated (lower of cost or market) and the method used in determining cost (LIFO, FIFO, average cost, etc.) should be disclosed in the notes of the financial statements.
(S.O. 6) The conventional retail inventory method is designed to approximate the lower of average cost or market.
(S.O. 6) The retail method assumes that the mix of the ending inventory is the same as the mix of the total goods available for sale.
(S.O. 6) The inclusion of both net markups and net markdowns in the computation of the cost to retail percentage yields an inventory valuation that approximates cost.
(S.O. 6) The conventional retail method includes net markdowns but excludes net markups in the computation of the cost to retail percentage.
(S.O. 6) The retail inventory method is not useful for interim reports.
(S.O. 6) Regardless of which version is used, the retail inventory method is sanctioned by the IRS.
(S.O. 5) The use of the gross profit method for interim reports does not preclude the need for a physical inventory to be taken at least annually.
(S.O. 5) The gross margin expressed as a percentage of cost is normally less than the gross margin expressed as a percentage of sales.
(S.O. 5) Gross margin is the excess of selling price over cost.
(S.O. 4) If the contracted price under a purchase commitment is less than market and it is expected that gains will occur when the purchase is effected, gains should be recognized in the period during which such increases in market prices take place.
(S.O. 4) The account Accrued Loss on Purchase Commitments should be included in the stockholders’equity section of the balance sheet.
(S.O. 4) No asset or liability is recognized at the inception of a purchase commitment because the contract is "executory" in nature.
(S.O. 3) The allocation of a lump sum cost among the individual units on the basis of relative sales value assumes that each individual unit should show the same dollar amount of profit.
(S.O. 2) The recognition of inventories at selling price less cost of disposal means that income is usually recognized before the goods are transferred to an outside party.
(S.O. 2) The application of the lower of cost or market rule to the inventory as a whole would yield a more conservative inventory value than would application of the rule to each individual item.
(S.O. 2) Under the lower-of-cost-or-market rule, an item of inventory should not be valued at an amount in excess of net realizable value.
(S.O. 2) Under the lower-of-cost-or-market rule, the income statement may show a larger net income in future periods than would be justified if the inventory were carried forward at cost.
(S.O. 1) When inventory is written down to market, this new basis is considered to be the cost basis for future periods.
(S.O. 1) The loss resulting from the write-down of inventory to market normally should be shown in the income statement as an extraordinary item.
(S.O. 1) It is acceptable practice to write down inventory to market when market is lower than cost, but it is not acceptable to write up inventory to market when market is higher than cost.
(S.O. 1) Net realizable value is the estimated selling price in the normal course of business less the normal profit margin.
(S.O. 1) As used in the lower-of-cost-or-market rule, market should not exceed net realizable value.
(S.O. 1) Inventory should be written down to market when its revenue-producing ability is no longer as great as its cost.
(S.0O. 9) The acquisition cost of a heavily used raw material changes frequently. The inventory amount of this material at year end will be the same if perpetual records (units and costs) are kept as it would be under a periodic inventory method only if the inventory amount is computed under
(S.O.9) Which of the following is not considered an advantage of LIFO when prices are rising?YG> OR The inventory will be overstated.The more recent costs are matched against current revenues.There will be a deferral of income tax.A company's future reported earnings will not be affected
(S.O. 8) Estimates of price-level changes for specific inventories are required for which of the following inventory methods?VAW>Weighted-average cost.FIFO.LIFO.Dollar-value LIFO.
(S.O. 8) Amidei Company adopts dollar-value LIFO inventory on 12/31/12 when its inventory at current price is $45,000. The inventory value on 12/31/13 at current 2012 prices is $65,000. If prices increased by 30% during 2013, what is the dollar-value LIFO inventory at 12/31/013
(S.O. 8) Which of the following statements is not true as it relates to the dollar-value LIFO inventory» method?A. It is easier to erode LIFO layers using dollar-value LIFO techniques than it is with specific goods pooled LIFO. f Under the dollar-value LIFO method, it is possible to have the
(S.O. 8) The dollar-value inventory method is an improvement over the traditional LIFO pool approach because:the mathematical computations are greatly simplified.it is easier to apply where few inventory items are employed and little change in product mix is anticipated.increases and decreases in a
(S.O. 5) Assuming no beginning inventory, what can be said about the trend of inventory prices if cost of goods sold computed when inventory is valued using the FIFO method exceeds cost of goods sold when inventory is valued using the LIFO method?A. Prices increased.B Prices decreased.Ce Prices
(S.O. 5) The traditional LIFO approach which tends to emphasize specific goods in costing LIFO inventories is often unrealistic because:A. it does not result in a proper matching of costs and revenues in a particular period.cash flows are often distorted and can be delayed for one or two subsequent
(S.O. 5) In periods of rising prices, use of LIFO rather than the FIFO inventory method will most likely have what effect on the following items?——Net Cost of Working Income Goods Sold Capital as Higher _ Lower B. (Lower > C Higher) Lowery Cc. Higher “Higher ther D. \ Lower-- ) C Higher)
(S.O. 5) The purchase of inventory items on account using the perpetual inventory method:changes working capital and the current ratio.has no effect on working capital but probably changes the current ratio.has no effect on the current ratio but probably changes working capital.vow has no effect on
(S.0.5) The Slowe Company has been using the LIFO cost method of i inventory valuation for 8 years.Its 2012 ending inventory was $135,000 but it would have been $180,000 if FIFO had been used.Thus, if FIFO had been used, Slowe's net income before income taxes would have been:A. $45,000 less in
(S.0. 5) Which of the following represents a departure from the historical cost basis of valuing inventories? SN Pe rt eee A. Dollar-value LIFO.B. Specific identification.CG Replacement cost.D. Absorption costing.
(S.O. 5) One argument against the use of the specific identification inventory method is:A. actual costs are matched against actual revenues.B. estimated costs are matched against actual revenues.© the potential for the manipulation of net income by selecting costs to match against revenues, D.
(S.O. 5) The use of LIFO under a perpetual inventory system (units and costs):A. may yield a higher inventory valuation than LIFO under a periodic inventory system when prices are steadily falling.B. may yield a higher mventory valuation than, LIFO_under a periodic inventory system when prices are
(S.O. 5) Which of the following inventory methods comes closest to stating ending inventory at replacement costs?A. FIFO.iB. LIFO.Gg, Weighted-average.DD; Base stock.
(S.O. 4) The use of a Purchase Discounts Lost account implies that the recorded cost of a purchased inventory item is its:nantes:invoice price.invoice price plus the purchase discount price.invoice price less the purchase discount allowable, when taken.invoice price less the purchase discount
(S.0. 4) Which of the following interest costs should be capitalized?Assets Produced as Assets Constructed for Discrete Projects for Internal Use Sale or Lease A. Yes Yes B. Yes No Cc: No Yes D. No No
(S.O. 4) Costs which are inventoriable include all of the following except:A. costs that are directly connected with the bringing of goods to the place of business of the buyer.B. costs that are directly connected with the converting of goods to a salable condition.C: buying costs of a purchasing
(S.O. 3) The failure to record a purchase of merchandise on account even though the goods are properly included in the physical inventory results in:an overstatement of assets and net income. ‘4 A Nf an understatement of assets and net income. 7 -an understatement of costof g oods sold andl
(S.O. 3) The ending inventory of the Bonie Company is understated in year one by $20,000. This error is not corrected in year one or in year two. What impact will this error have on total net income for years one and two combined?No effect on total net income for the two years.Overstate total
(S.O. 2) The following items were included in Voigt Corporation's inventory account at December 31, 2012:Goods held on consignment by Voigt $ 7,000 Merchandise out on consignment, at sales price, including 30% mark-up on selling price 12,000 Goods purchased, in transit, shipped f.0.b. shipping
(S.O. 2) Goods in transit at the balance sheet date should be included in the purchaser's inventory if they are shipped:F.O.B.F.O.B. Shipping Destination Point . A. No No B. No Yes C. Yes No D. Yes Yes
S.O. 2) Valuation of inventories requires the determination of all of the following except:The costs to be included in-inventory.The physical goods 't o be included in inventory.The cost of goods held on consignment from other companies.TOw> The cost flow assumptitoon b e adopted.
(S.O. 2) The amount of inventory purchased during a particular year is accumulated in a Purchases account under a:Periodic Perpetual Inventory Inventory System System A. Yes No B. Yes Yes X(Cs No Yes D. No No X
(S.O. 10) LIFO would probably be preferable where prices tend to lag behind costs.
(S.O. 9) A change in inventory methods requires that the change be explained and its effect be disclosed in the financial statements.
(S.O. 9) Tax benefits are the major reason why LIFO has become popular.
(S.O. 9) Ina period of rising prices, LIFO yields a larger cost of goods sold than does FIFO.
(S.O. 8) All companies using the dollar-value LIFO method are required to use the same price index.
(S.O. 8) Under dollar-value LIFO, there will never be a layer for a particular year unless the quantity of inventory increased during that year.
(S.O. 7) To alleviate the LIFO liquidation problems and to simplify the accounting, goods can be combined into pools.
(S.O. 6) A LIFO reserve account is generally used when a company uses LIFO for tax and external reporting purposes but uses another method for internal purposes.
(S.O. 5) LIFO comes closer than FIFO to stating inventory on the balance sheet at current costs.
(S.O. 5) If LIFO is used for tax purposes, it must also be used for financial reporting purposes.
(S.O. 5) The ending inventory under a FIFO periodic inventory system will be the same as under a FIFO perpetual inventory system.
(S.O. 5) A major argument in favor of the FIFO method of inventory costing is that current costs are matched against current revenues.
(S.O. 5) Under the average cost method, beginning inventory should be included in the total units available but not in the total cost of goods available in computing the average cost per unit.
(S.O. 5) When a company selects a cost flow assumption (FIFO, LIFO, average cost, etc.), it must be consistent with the actual physical movement of goods through the company.
(S.0. 4) The use of a Purchase Discounts Lost account indicates that purchases are being recorded net of purchase discounts.
(S.O. 4) Ifthe gross method is employed, purchase discounts should be reported as a deduction from purchases on the income statement.
(S.O. 4) Period costs and product costs are both inventoriable costs that relate to manufactured rather than purchased inventory.
(S.O. 3) An understatement of the ending inventory will cause cost of goods sold to be understated and net income to be overstated for that period.
(S.O. 2) Interest costs associated with getting inventories ready for sale usually are included in the cost of the inventory.
(S.O. 2) Goods held on consignment should be included in the consignee's inventory reported on the balance sheet.
(S.O. 2) When goods are shipped f.0.b. shipping point, title passes only when the seller receives full payment for the merchandise.
(S.O. 2) The cost of goods sold is the excess of the cost of goods available for sale during the period less the cost of the goods on hand at the end of the period.
(S.O. 2) The perpetual inventory system provides a continuous record of the balances in both the inventory account and the cost of goods sold account.
(S.O. 1) In the determination of cost of goods sold, cost of goods manufactured is to a manufacturing concern what cost of goods purchased is to a merchandising concern.(S.O. 2) A physical inventory should be taken at least annually, even when a perpetual inventory system is used.
(S.O. 10) In preparing its bank reconciliation for the month of September 2012, Moran Company has available the following information:Balance per bank statement, 9/30/12 $42,000 Deposits in transit, 9/30/12 7,200 Outstanding checks, 9/30/12 6,500 Bank service charges for September 25 What should be
(S.O. 10) In a bank reconciliation that attempts to reconcile the bank balance to the corrected cash balance, the following items would affect the reconciliation in what way?Outstanding Deposits Checks In Transit A. Added Added B. Subtracted Added os Added Subtracted 1), Subtracted Subtracted
(S.O. 10) When preparing a bank reconciliation for the purpose of arriving at the correct cash balance:A. outstanding checks can be added to the balance per books.B. NSF checks should be deducted from the balance per books.c; deposits in transit are deducted from the balance per bank.D. notes
(S.O. 8) Of the following conditions, which is the only one that lea ei if the transfer of. . . SST recSeivabeles with rSeoceo urse is to be acNcoTu nteBda sfeo r haes a a seavlee?A. The transferor is obligated to make a genuine effort to identify those receivables that are uncollectible. ~B. The
(S.O. 8) In which of the following accounts receivable assignment arrangements dao ll receivables serve as coollllaatteerraall ffoor rt thhe ep prroommiissssoo ry ‘nnoottee ggiivveenn bbyy tthhee aassssiiggnnoorr?’ ?General Specific Assignment Assignment A. Yes Yes B. VES No C: No Yes D. No No
(S.O. 8) Thresher Corporation sold its accounts receivable outright to Kari Company, a financing company which normally buys accounts receivable of other companies without recourse. The a ee accounts receivable have been A. collateralized.ine pledged.C. factored.D. assigned.
(S.O. 8) Which of the following statements is incorrect regarding the classification of accounts and notes receivable?A. Segregation of the different types of receivables is required if they are material. ve B. Disclose any loss contingencies that exist on the receivables.c Any discount or premium
(S.O. 7) Vonesh Company sold a drill press to Mary Company, taking in exchange a zero interestbearing note. The driil press had a fair market value of $12,000 and the face amount of the note was$13,000. In a balance sheet prepared immediately after receipt of the note, Vonesh should present the
(S.O. 7) Pinkowski sold land to Ewell for $100,000 cash and a zero interest-bearing note with a face amount of $400,000. The fair value of the land at the date of sale was $450,000. Pinkowski should value the note receivable at:ie $450,000.B: $400,000.Cc: $350,000.D. $500,000.
(S.O. 6) Moluf Corporation receives a 5- -year, $20,000 zero interest-bearing note, the present value of which is $11,348.60. What is the implicit interest rate that equates the total cash to be received to the present value of the future cash flows?A. 8%B. 9%C. 10%D 12%
(S.O. 5) The basic accounting issues for both accounts receivable and notes receivable would center around which of the following?Recognition Valuation A. vies No B. nies Yes C; No Yes D. No No
(S.O. 5) Gardin Corporation useas lthel owanmcetheod of accounting for uncollectible accounts.During 2012 Gardin had charges to Bad Debts Expense of $20,000 and wrote off as uncollectible, accounts receivable totaling $16,000. These transactions decreased working capital by:A. $20,000.B.
(S.O. 5) Green Company wrote off a client's account receivable of $400.as uncollectible. What will be the effect on net income under each of the following methods of recognizing bad debt expense?_ _ Direct Write-Off Allowance A. None Decrease B. Decrease None CG None None D: Decrease Decrease
(S.O. 5) The allowance method is preferable to the direct write-off method because the allowance method Mr UES east Ph Paul hi) Sareea Mate aE A. relies on estimates which are always accurate and stable among years.B. reflects the real facts. ri 4 :eF recognizes the expense of a bad debt in the
(S.O. 5) For the month of December 2012, the records of Turling Corporation show the following information:Cash sales $20,000 Cash received on accounts receivable 25,000 Accounts receivable, December 1, 2012 70,000 Accounts receivable, December 31, 2012 64,000 Accounts receivable written off as

Showing 200 - 300 of 871

Study Guide Intermediate Accounting Volume 2 Chapters 15-24 14th Edition Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield - Solutions

Step by Step Answers