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If beginning inventory is understated by $10,000, the effect of this error in the current period is If beginning inventory is understated by $10,000, the effect of this error in the current period is

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Which inventory method generally results in costs allocated to ending inventory that will approximate their current cost?


A) LIFO
B) FIFO
C) Average cost method
D) Whichever method that produces the highest ending inventory figure

E) All of the above
F) C) and D)

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If a company has no beginning inventory and the unit price of inventory is increasing during a period, the cost of goods available for sale during the period will be the same under the LIFO and FIFO inventory methods.

A) True
B) False

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In periods of rising prices, the inventory method which results in the inventory value on the balance sheet that is closest to current cost is the


A) FIFO method.
B) LIFO method.
C) average-cost method.
D) tax method.

E) B) and D)
F) B) and C)

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Sassy Saxophones has the following inventory data: Sassy Saxophones has the following inventory data: Assuming that a periodic inventory system is used, what is the amount allocated to ending inventory on a LIFO basis? A) $18,320 B) $18,370 C) $38,480 D) $38,530 Assuming that a periodic inventory system is used, what is the amount allocated to ending inventory on a LIFO basis?


A) $18,320
B) $18,370
C) $38,480
D) $38,530

E) A) and B)
F) A) and C)

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The FIFO inventory method results in an ending inventory valued at the most recent cost.

A) True
B) False

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The lower-of-cost-or-net-realizable-value rule implies that it is unacceptable to report inventory at a cost that is in excess of its net realizable value.

A) True
B) False

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Hogan Industries had the following inventory transactions occur during 2022: Hogan Industries had the following inventory transactions occur during 2022: The company sold 306 units at $63 each and has a tax rate of 30%.Assuming that a periodic inventory system is used and operating expenses of $1,800, what is the company's after-tax income using FIFO? (rounded to whole dollars) A) $2,832 B) $3,288 C) $2,302 D) $1,982 The company sold 306 units at $63 each and has a tax rate of 30%.Assuming that a periodic inventory system is used and operating expenses of $1,800, what is the company's after-tax income using FIFO? (rounded to whole dollars)


A) $2,832
B) $3,288
C) $2,302
D) $1,982

E) A) and C)
F) A) and B)

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An aircraft company would most likely have a


A) high inventory turnover.
B) low profit margin.
C) high volume.
D) low inventory turnover.

E) A) and C)
F) A) and B)

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Grape Gratuities Company has the following inventory data: Grape Gratuities Company has the following inventory data: A physical count of merchandise inventory on July 30 reveals that there are 50 units on hand.Using the FIFO inventory method, the amount allocated to ending inventory for July is A) $1,170. B) $1,010. C) $1,070. D) $1,100. A physical count of merchandise inventory on July 30 reveals that there are 50 units on hand.Using the FIFO inventory method, the amount allocated to ending inventory for July is


A) $1,170.
B) $1,010.
C) $1,070.
D) $1,100.

E) B) and C)
F) B) and D)

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Independent internal verification of the physical inventory process occurs when


A) the employee is required to count all items twice for sake of verification.
B) the items counted are compared to the inventory account balance.
C) a second employee counts the inventory and compares the result to the count made by the first employee.
D) all prenumbered inventory tags are accounted for.

E) A) and C)
F) None of the above

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Classic Floors has the following inventory data: Classic Floors has the following inventory data: Assuming that a perpetual inventory system is used, what is the value of ending inventory on a LIFO basis for July? A) $931.20 B) $1,404.00 C) $708.00 D) $472.80 Assuming that a perpetual inventory system is used, what is the value of ending inventory on a LIFO basis for July?


A) $931.20
B) $1,404.00
C) $708.00
D) $472.80

E) A) and B)
F) A) and C)

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Quark Inc.just began business and made the following four inventory purchases in June: Quark Inc.just began business and made the following four inventory purchases in June: A physical count of merchandise inventory on June 30 reveals that there are 200 units on hand.Using the FIFO inventory method, the amount allocated to ending inventory for June is A) $1,326. B) $1,320. C) $1,404. D) $1,416. A physical count of merchandise inventory on June 30 reveals that there are 200 units on hand.Using the FIFO inventory method, the amount allocated to ending inventory for June is


A) $1,326.
B) $1,320.
C) $1,404.
D) $1,416.

E) A) and D)
F) C) and D)

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Snug-As-A-Bug Blankets has the following inventory data: Snug-As-A-Bug Blankets has the following inventory data: Assuming that a perpetual inventory system is used, what is the ending inventory on a LIFO basis for July? A) $5,496 B) $5,508 C) $5,544 D) $5,796 Assuming that a perpetual inventory system is used, what is the ending inventory on a LIFO basis for July?


A) $5,496
B) $5,508
C) $5,544
D) $5,796

E) None of the above
F) C) and D)

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Delightful Discs has the following inventory data:. Delightful Discs has the following inventory data:. A physical count of merchandise inventory on November 30 reveals that there are 100 units on hand.Ending inventory under LIFO is A) $657 B) $632 C) $1,269 D) $1,295 A physical count of merchandise inventory on November 30 reveals that there are 100 units on hand.Ending inventory under LIFO is


A) $657
B) $632
C) $1,269
D) $1,295

E) All of the above
F) C) and D)

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Under a periodic inventory system, the merchandise on hand at the end of the period is determined by a physical count of the inventory.

A) True
B) False

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A problem with the specific identification method is that


A) inventories can be reported at actual costs.
B) management can manipulate income.
C) matching is not achieved.
D) the lower of cost or market basis cannot be applied.

E) C) and D)
F) B) and D)

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In accounting for inventory, the assumed flow of costs must match the physical flow of goods.

A) True
B) False

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Baker Bakery Company just began business and made the following four inventory purchases in June: Baker Bakery Company just began business and made the following four inventory purchases in June: A physical count of merchandise inventory on June 30 reveals that there are 210 units on hand.Using the FIFO inventory method, the amount allocated to ending inventory for June is A) $1,456 B) $1,508 C) $1,824 D) $1,848 A physical count of merchandise inventory on June 30 reveals that there are 210 units on hand.Using the FIFO inventory method, the amount allocated to ending inventory for June is


A) $1,456
B) $1,508
C) $1,824
D) $1,848

E) C) and D)
F) All of the above

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When is a physical inventory usually taken?


A) When goods are not being sold or received.
B) When the company has its greatest amount of inventory.
C) At the end of the company's fiscal year.
D) When the company has its greatest amount of inventory and at the end of the company's fiscal year.

E) None of the above
F) A) and C)

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