1) If ending inventory for the current period is understated, then owner's equity will be

A overstated at the end of the current period, but it will be correct at the end of the next period.

B understated at the end of the current period and overstated at the end of the next period.

C overstated at the end of the current period and understated at the end of the next period.

D understated at the end of the current period, but it will be correct at the end of the next period.

2) Which of the following inventory costing methods requires a company to keep track of the actual movement of individual inventory items?

A FIFO

B average cost

C specific unit cost

D LIFO

3) Refer to the following table:

Assume that all goods are sold throughout the year for $19 per unit. What would the gross profit be if calculated under the periodic LIFO?

A $1,570

B $1,510

C $1,260

D $1,465

4) Two separate errors affected computer sales in 2013. The beginning inventory was understated by $28,000 and the ending inventory was understated by $43,000. Net income in 2013 will be.

A understated by $15,000.

B understated by $43,000.

C overstated by $15,000.

D understated by $71,000.

5) For the current year, Hodges Department Store reported the following data:

The current replacement cost of inventory on balance sheet data is $91,730. Using the lower-of-cost-or-market rule, what is the cost of goods sold for Hodges Department Store?

A $982,720

B $898,060

C $897,290

D $989,020

6) Two separate errors affected computer sales in 2013. The beginning inventory was overstated by $12,000 and the ending inventory was overstated by $18,000. Net income in 2013 will be

A overstated by $12,000.

B overstated by $30,000.

C overstated by $6,000.

D understated by $6,000.

7) If a company uses LIFO and prices are rising, large purchases of inventory near the end of the year will

A have no effect on the amount of cost of goods sold.

B reduce the gross profit.

C increase income taxes paid.

D reduce cost of goods sold.

8) Refer to the following table:

 

Under the perpetual LIFO method, what would the cost of goods sold on the income statement be?

A $540

B $1,760

C $1,700

D $1,186

9) Using the lower-of-cost-or-market rule of valuing inventory allows the accountant to attain

A consistency.

B full disclosure.

C conservatism.

D matching.

10) The journal entry to transfer the cost of purchases to cost of goods sold includes a

A debit to cost of goods sold.

B credit to cost of goods sold.

C debit to inventory.

D debit to purchases.