Intermediate Accounting chapter 9 Exam Questions with Complete Answers Latest update 2024 Already Passed

Intermediate Accounting chapter 9 Exam Questions with Complete Answers Latest update 2024 Already Passed Which of the following would not be included in the cost of work in process inventory? - Answers Depreciation on office equipment in the sales manager's office Which of the following would not be reported as inventory? - Answers Machinery acquired by a manufacturing company for use in the production process A firm using the perpetual inventory method returned defective merchandise costing $2,000 to one of its suppliers. The entry to record this transaction will include a debit to - Answers Accounts Payable. When using the periodic inventory method, which of the following generally would not be separately accounted for in the computation of cost of goods sold? - Answers Trade discounts applicable to purchases during the period Merchandise shipped FOB shipping point on the last day of the year should ordinarily be included in - Answers the buyer's inventory balance. If goods shipped FOB destination are in transit at the end of the year, they should be included in the inventory balance of the - Answers seller Morris Industries purchased merchandise with a list price of $100,000, subject to a trade discount of 20 percent and credit terms of 2/10, n/30. At what amount should Morris record the cost of this merchandise if the gross method is used? - Answers Morris Industries purchased merchandise with a list price of $100,000, subject to a trade discount of 20 percent and credit terms of 2/10, n/30. At what amount should Morris record the cost of this merchandise if the gross method is used? Which inventory costing method would not be appropriate for a manufacturer using a perpetual inventory system? - Answers Average cost The specific identification method of inventory costing - Answers matches the flow of recorded costs with the physical flow of goods. The term LIFO reserve refers to - Answers the difference between the ending inventory amount under LIFO and the ending inventory amount under another inventory cost flow assumption. Which of the following statements is true? - Answers LIFO is the only inventory method that must be used for financial reporting purposes if used for tax purposes. Which of the following will occur when inventory costs are decreasing? - Answers FIFO will result in lower net income and lower ending inventory than will LIFO. During periods of rising prices, when the FIFO inventory cost flow method is used, a perpetual inventory system would - Answers result in the same ending inventory as a periodic inventory system. The estimated selling price of the inventory minus any normal selling costs is known as: - Answers Net realizable value. According to lower-of-cost-or market, the market value of inventory is: - Answers All of these are correct. The use of the gross profit method assumes - Answers the relationship between selling price and cost of goods sold is similar to prior years. The gross profit method of estimating inventory would not be useful when - Answers there is a significant change in the mix of products being sold. If the ending inventory balance is understated, net income of the same period - Answers will be understated. When the current year's ending inventory amount is overstated, the - Answers current year's net income is overstated. An example of an inventory accounting policy that should be disclosed is the - Answers method used for inventory costing. Which one of the following would cause a decrease in the cost ratio as used in the retail inventory method? - Answers Higher retail prices All of the following statements are true except: - Answers the retail inventory method is less flexible than the gross profit method when it comes to the assumptions of FIFO, LIFO, and average cost. What is the purpose of a LIFO pool? - Answers Both "To provide an estimate of what cost of goods sold would be if LIFO were applied strictly and laboriously" & "To simplify the LIFO calculations associated with large numbers of products" are correct. From the standpoint of income tax effects, what is the optimal number of LIFO pools? - Answers One A purchase commitment is very similar to a type of derivative called a - Answers forward contract. Which of the following describes the flow of product costs through the inventory accounts of a manufacturer? - Answers Raw materials, goods in process, finished goods According to the text, inventory has declined in the U.S.since 1979 as a percentage of total assets for companies due to: - Answers Both "more efficient management of inventory" and "a decrease in the prominence of old-style smokestack industries that carried large inventories"