9 question practice quiz, multiple choice

1.A company just starting business made the following purchases in August:

August 1	Â	300 units	Â	$1,560
August 12	Â	400 units	Â	2,340
August 24	Â	400 units	Â	2,520
August 30	Â	300 units	Â	1,980
Â	Â	1,400 units	Â	$8,400

A physical count of the inventory on August 31 reveals that there are 500 units on hand. Using the FIFO inventory method in a perpetual inventory system, how much is the value of the ending inventory on August 31?

Â

$5,670

 

Â

$5,160

 

Â

$3,240

 

Â

$2,730

2. Which statement is true in a perpetual inventory system?

Â	FIFO cost of goods sold will be the same as in a periodic inventory system.

 

Â	LIFO cost of goods sold will be the same as in a periodic inventory system.

 

Â	Average costs are based entirely on unit-cost simple averages.

 

Â	A new average is computed under the average cost method after each sale.

3. Inventory turnover is calculated by dividing cost of goods sold by

Â	average inventory.

 

Â	beginning inventory.

 

Â

365 days.

 

Â	ending inventory.

4. Net sales are $2,000,000, cost of goods sold is $960,000, and average inventory is $30,000. How many days sales are in inventory?

Â

2.6

 

Â

66.7

 

Â

11.4

 

Â

12.2

5. Carlos Company had beginning inventory of $80,000, ending inventory of $110,000, cost of goods sold of $285,000, and sales revenue of $475,000. What is Carlos’ days in inventory?

Â

73 days

 

Â	121.7 days

 

Â	102.5 days

 

Â

84.5 days

6. The following information came from the income statement of the Wilkens Company at December 31, 2017: sales revenue $1,800,000; beginning inventory $160,000; ending inventory $240,000; and gross profit $600,000. What is Wilkens' inventory turnover ratio for 2017?

Â

3.0 times

 

Â	3.75 times

 

Â

2.5 times

 

Â

6.0 times

7. In a period of falling prices, which of the following methods will give the largest net income?

Â	Average-cost

 

Â

LIFO

 

Â	Specific identification

 

Â

FIFO

8. In a period of rising prices which inventory method will result in the greatest amount of income tax expense?

Â	Specific identification

 

Â

FIFO

 

Â	Average cost

 

Â

LIFO

9. Which of the following is true of the FIFO inventory method?

Â	It assumes that the cost of the earliest units purchased are the last to be allocated to cost of goods sold.

 

Â	It assumes that the cost of the earliest units purchased are the last to be allocated to the beginning inventory.

 

Â	It assumes that the cost of the earliest units purchased are the first to be allocated to cost of goods sold.

 

Â	It assumes that the cost of the earliest units purchased are the first to be allocated to the ending inventory.