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Unformatted text preview: CHAPTER 8 VALUATION OF INVENTORIES: A COST BASIS APPROACH MULTIPLE CHOICE Conceptual Answer No. Description d 1. Entries under perpetual inventory system. b 2. Classification of goods in transit. a 3. Classification of goods in transit. d 4. Identify inventory ownership. d 5. Identify a product financing arrangement. a 6. Identify ownership under product financing arrangement. b 7. Classification of goods on consignment. b 8. Effect of recording merchandise on consignment. a 9. Effect of ending inventory overvaluation. a 10. Effect of inventory errors on income. d 11. Effect of understating purchases and ending inventory. b 12. Identification of product costs. d 13. Determine product costs. b 14. Interest capitalization in manufacturing inventory. a 15. Classification of factory overhead costs. b 16. Classification of fixed overhead costs. b 17. Absorption and variable costing. d 18. Determine cost of purchased inventory, using net method. a 19. Determine cost of purchased inventory, using gross method. a 20. Recording inventory purchases at gross or net amounts. c 21. Recording inventory purchases at gross or net amounts. a 22. Nature of trade discounts. a 23. Average cost inventory valuation. b 24. Weighted-average inventory method. a 25. Nature of FIFO valuation of inventory. b 26. Flow of costs in a manufacturing situation. a 27. FIFO and decreasing prices. b 28. FIFO and increasing prices. a 29. FIFO and increasing prices. b 30. FIFO and LIFO inventory assumptions. c 31. LIFO and increasing prices. d 32. Knowledge of inventory valuation methods. d 33. Periodic and perpetual inventory methods. d 34. LIFO reserve account classification. d 35. LIFO for tax purposes and external reporting. c 36. LIFO advantages. d 37. Effect of inventory and depreciation errors on income. MULTIPLE CHOICE Computational Answer No. Description a 38. Effect of inventory and depreciation errors on retained earnings. a 39. Effect of inventory errors on working capital. d 40. Calculate cost of goods available for sale. d 41. Accounting for a purchase return (net method). d 42. Adjust Accounts Payable using the net method. b 43. Calculate ending inventory using weighted-average. d 44. Calculate ending inventory using moving average. b 45. Calculate ending inventory using LIFO. d 46. Calculate cost of goods sold using FIFO. a 47. Effect of using LIFO or FIFO. a 48. Perpetual inventoryLIFO valuation. c 49. Perpetual inventoryLIFO valuation. c 50. Perpetual inventoryFIFO valuation. b 51. Perpetual inventoryaverage cost valuation. c 52. Calculate ending inventory using dollar-value LIFO. c 53. Calculate ending inventory using dollar-value LIFO. a 54. Calculate ending inventory using dollar-value LIFO....
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- Spring '09