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- # 8 - 2 Test Bank for Intermediate Accounting, Seventeenth Edition 8 - 3 Valuation of Inventories: A Cost-Basis Approach CHAPTER 8 VALUATION OF INVENTORIES: A COST-BASIS APPROACH...

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8 - 2
Test Bank for Intermediate Accounting, Seventeenth Edition
8 - 3
Valuation of Inventories: A Cost-Basis Approach
CHAPTER 8
VALUATION OF INVENTORIES:
A COST-BASIS APPROACH
TRUE-FALSe—Conceptual
Answe
No.
Description
T
1.
Work-in-process inventory.
F
2.
Merchandising and manufacturing inventory accounts.
T
3.
Modified perpetual inventory system.
F
4.
Determining when title passes.
F
5.
Period vs. product costs.
T
6.
Reporting Purchase Discounts Lost.
F
7.
Cost flow assumption.
T
8.
FIFO periodic vs. perpetual system.
F
9.
Selection of inventory method.
T
10.
Appropriateness of LIFO.
T
11.
LIFO Reserve.
F
12.
Using LIFO for reporting purposes.
F
13.
LIFO liquidation.
T
14.
LIFO liquidations.
T
15.
Dollar-value LIFO.
F
16.
Dollar-value LIFO method.
F
17.
LIFO-FIFO comparison.
T
18.
LIFO conformity rule.
T
19.
Inventory e
ors.
T
20.
Overstatement of purchases and ending inventory.
Multiple Choice—Conceptual
Answe
No.
Description
c
21.
Identify manufacturer inventory similar to merchandise inventory.
d
22.
Sales with buyback agreement.
a
23.
Sales with high rates of return.
a
24.
Reason inventories are included in net income computation.
c
25.
Characteristic of perpetual inventory system.
a
26.
Reporting consignment inventory in balance sheet.
d
27.
Reporting goods in transit purchased f.o.b. destination.
28.
Effect of inventory e
or on net income.
29.
Effect of goods in transit on the cu
ent ratio.
c
30.
Description of consigned inventory.
d
31.
Entries under perpetual inventory system.
32.
Classification of goods in transit.
a
33.
Classification of goods in transit.
Multiple Choice—Conceptual (cont.)
Answe
No.
Description
d
34.
Identify inventory ownership.
d
35.
Identify a product financing a
angement.
a
36.
Identify ownership under product financing a
angement.
37.
Classification of goods on consignment.
c
S38.
Valuation of inventories.
P39.
Classification of beginning inventory.
P40.
Effect of beginning inventory overstated.
d
S41.
Effect of understating purchases.
42.
Effect of recording merchandise on consignment.
a
43.
Effect of ending inventory overvaluation.
a
44.
Effect of inventory e
ors on income.
d
45.
Effect of understating purchases and ending inventory.
46.
Effect of beginning inventory overstatement.
c
47.
Identification of a product cost.
d
48.
Identification of a period cost.
d
49.
Method used to record cash discounts.
a
50.
Identification of inventory costs.
51.
Identification of product costs.
d
52.
Determine product costs.
53.
Interest capitalization in manufacturing inventory.
d
54.
Determine cost of purchased inventory, using net method.
a
55.
Determine cost of purchased inventory, using gross method.
a
56.
Recording inventory purchases at gross or net amounts.
c
57.
Recording inventory purchases at gross or net amounts.
a
58.
Nature of trade discounts.
d
S59.
Identifying inventoriable costs.
P60.
Method approximating cu
ent cost.
a
61.
Average cost inventory valuation.
62.
Weighted-average inventory method.
a
63.
Nature of FIFO valuation of inventory.
64.
Flow of costs in a manufacturing situation.
a
65.
FIFO and decreasing prices.
66.
FIFO and increasing prices.
a
67.
FIFO and increasing prices.
68.
FIFO and LIFO inventory assumptions.
c
69.
LIFO and increasing prices.
d
70.
Knowledge of inventory valuation methods.
d
71.
Periodic and perpetual inventory methods.
c
72.
Appropriateness of specific identification method.
73.
FIFO and rising prices.
c
74.
LIFO and falling prices.
a
75.
LIFO reserve definition.
d
76.
LIFO reserve account classification.
d
77.
Specific-goods pooled LIFO approach.
c
78.
Double-extension method under dollar-value LIFO.
d
79.
Description of LIFO layer.
a
S80.
Dollar-value LIFO method.
Multiple Choice—Conceptual (cont.)
Answe
No.
Description
a
S81.
Identifying advantages of LIFO.
d
82.
LIFO for tax purposes and external reporting.
c
83.
LIFO advantages.
P These questions also appear in the Problem-Solving Survival Guide.
S These questions also appear in the Study Guide.
Multiple Choice—Computational
Answe
No.
Description
c
84.
Classification of inventory.
c
85.
Classification of inventory.
d
86.
Perpetual inventory method.
d
87.
Perpetual inventory method.
d
88.
Calculate ending inventory.
c
89.
Calculate ending inventory.
90.
Calculate total assets and net income.
c
91.
Calculate total assets and net income.
d
92.
Effect of inventory and depreciation e
ors on income.
a
93.
Effect of inventory and depreciation e
ors on retained earnings.
a
94.
Effect of inventory e
ors on working capital.
d
95.
Calculate cost of goods available for sale.
d
96.
Accounting for a purchase return (net method).
d
97.
Adjust Accounts Payable using the net method.
98.
Calculate ending inventory using weighted-average.
d
99.
Calculate ending inventory using moving average.
100.
Calculate ending inventory using LIFO.
d
101.
Calculate cost of goods sold using FIFO.
a
102.
Effect of using LIFO or FIFO.
a
103.
Perpetual inventory—LIFO valuation.
c
104.
Perpetual inventory—LIFO valuation.
d
105.
Perpetual inventory—FIFO valuation.
106.
Perpetual inventory—average cost valuation.
c
107.
Cost flow assumptions.
108.
Cost flow assumptions.
c
109.
Calculate units in ending inventory.
110.
Calculate cost of goods sold.
a
111.
Calculate cost of goods sold using average cost.
d
112.
Calculate ending inventory using average cost.
c
113.
Calculate ending inventory using FIFO.
d
114.
Calculate cost of goods sold using FIFO.
d
115.
Calculate ending inventory using LIFO.
c
116.
Calculate cost of goods sold using LIFO.
c
117.
LIFO reserve.
c
118.
LIFO reserve.
119.
LIFO liquidation.
120.
LIFO liquidation.
c
121.
Dollar-value LIFO.
Multiple Choice—Computational (cont.)
Answe
No.
Description
122.
Dollar-value LIFO.
c
123.
Dollar-value LIFO.
124.
Dollar-value LIFO.
c
125.
Calculate ending inventory using dollar-value LIFO.
c
126.
Calculate ending inventory using dollar-value LIFO.
a
127.
Calculate ending inventory using dollar-value LIFO.
128.
Calculate price index using double extension method.
129.
Calculate ending inventory using dollar-value LIFO.
d
130.
Calculate ending inventory using dollar-value LIFO.
a
131.
Calculate ending inventory using dollar-value LIFO.
c
132.
Calculate ending inventory using dollar-value LIFO.
d
133.
Calculate ending inventory using dollar-value LIFO.
Multiple Choice—CPA Adapted
Answe
No.
Description
a
134.
Identification of inventory costs.
c
135.
Determine cost of purchased inventory.
d
136.
Determine cost of sales.
137.
Calculate Accounts Payable at year end.
d
138.
Calculate Accounts Payable at year end.
a
139.
Calculate Accounts Payable at year end.
140.
Determine cost of purchased inventory.
c
141.
Determine cost of purchased inventory.
c
142.
Calculate unit cost using moving-average method.
a
143.
Periodic and perpetual inventory methods.
c
144.
FIFO and LIFO with increasing prices.
c
145.
Calculate ending inventory using LIFO.
a
146.
Dollar-value LIFO and the double extension approach.
147.
Calculate ending inventory using dollar-value LIFO.
BRIEF Exercises
Item
Description
B
E8-148
Recording purchases at net amounts.
BE8-149
Recording purchases at net amounts.
BE8-150
Comparison of FIFO and LIFO.
Exercises
Item
Description
E8-151
FIFO and LIFO inventory methods.
E8-152
FIFO and LIFO periodic inventory methods.
E8-153
Perpetual LIFO.
E8-154
Perpetual LIFO and periodic FIFO.
E8-155
Analysis of gross profit.
E8-156
Dollar-value LIFO.
PROBLEMS
Item
Description
P8-157
Inventory cut-off.
P8-158
Analysis of e
ors.
P8-159
Accounting for purchase discounts.
P8-160
Inventory methods.
P8-161
Dollar-value LIFO.
P8-162
Dollar-value LIFO.
CHAPTER LEARNING OBJECTIVES
1.
Understand inventory classifications and different inventory systems,
2.
Determine the goods and costs included in inventory.
3.
Describe and compare the cost flow assumptions used to account for inventories.
4.
Identify special issues related to LIFO.
5.
Determine the effect of inventory e
ors on the financial statements.
Summary of Questions by LEARNING Objectives and Bloom’s Taxonomy
    Item
    LO
    BT
    Item
    LO
    BT
    Item
    LO
    BT
    Item
    LO
    BT
    Item
    LO
    BT
    True-False Statements
    1.
    1
    C
    5.
    2
    C
    9.
    4
    C
    13.
    4
    K
    17.
    4
    K
    2.
    1
    K
    6.
    2
    K
    10.
    4
    C
    14.
    4
    K
    18.
    4
    K
    3.
    1
    K
    7.
    3
    K
    11.
    4
    C
    15.
    4
    K
    19.
    5
    C
    4.
    2
    C
    8.
    3
    K
    12.
    4
    K
    16.
    4
    K
    20.
    5
    C
    Multiple Choice Questions
    21.
    1
    C
    47.
    2
    C
    73.
    3
    C
    99.
    3
    AP
    125.
    4
    AP
    22.
    2
    K
    48.
    2
    C
    74.
    3
    C
    100.
    3
    AP
    126.
    4
    AP
    23.
    2
    K
    49.
    2
    C
    75.
    4
    K
    101.
    3
    AP
    127.
    4
    AP
    24.
    1
    C
    50.
    2
    K
    76.
    4
    C
    102.
    3
    AN
    128.
    4
    AP
    25.
    1
    K
    51.
    2
    K
    77.
    4
    K
    103.
    3
    AP
    129.
    4
    AP
    26.
    2
    K
    52.
    2
    C
    78.
    4
    K
    104.
    3
    AP
    130.
    4
    AP
    27.
    2
    K
    53.
    2
    C
    79.
    4
    K
    105.
    3
    AP
    131.
    4
    AP
    28.
    1
    AN
    54.
    2
    K
    80.
    4
    C
    106.
    3
    AP
    132.
    4
    AP
    29.
    1
    AN
    55.
    2
    K
    81.
    4
    AN
    107.
    3
    AN
    133.
    4
    AP
    30.
    2
    K
    56.
    2
    AN
    82.
    4
    C
    108.
    3
    AN
    134.
    1
    AN
    31.
    1
    C
    57.
    2
    AN
    83.
    4
    C
    109.
    3
    AP
    135.
    1
    AP
    32.
    1
    C
    58.
    2
    C
    84.
    1
    AP
    110.
    3
    AP
    136.
    1
    AP
    33.
    1
    C
    59.
    2
    C
    85.
    1
    AP
    111.
    3
    AP
    137.
    1
    AP
    34.
    1
    C
    60.
    3
    C
    86.
    1
    AP
    112.
    3
    AP
    138.
    1
    AP
    35.
    1
    AP
    61.
    3
    C
    87.
    1
    AP
    113.
    3
    AP
    139.
    1
    AP
    36.
    1
    AP
    62.
    3
    C
    88.
    2
    AP
    114.
    3
    AP
    140.
    2
    AP
    37.
    1
    K
    63.
    3
    K
    89.
    2
    AP
    115.
    3
Answered Same Day Jul 20, 2021

Solution

Sumit answered on Jul 26 2021
133 Votes
Answers to MCQs:
1. Option C
2. Option D
3. Option D
4. Option D
5. Option B
6. Option C
7. Option B
8. Option D
9. Option C
10. Option A
11. Option C
12. Option
13. Option B
14. Option A
19. Option D
20. Option B
21. Option A
22. Option B
23. Option C
24. Option A
25. Option...
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