tbch08 - CHAPTER 8 Cost of Goods Sold and Inventory:...

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C HAPTER 8 Cost of Goods Sold and Inventory: Identification and Valuation M ULTIPLE C HOICE Q UESTIONS Theory/Definitional Questions 1 Costs included in work in process inventory 2 Definition of LIFO reserve 3 LIFO conformity rule 4 Interim period LIFO liquidation 5 Inventory pools 6 Examples of inventory 7 Goods on consignment 8 Flow of product costs through inventory accounts 9 Inventory shrinkage--how it affects raw materials and cost of goods sold 10 Determination of cost of goods sold 11 Goods on consignment--included in consignor's inventory 12 Use of discounts lost account 13 The effect of omission of purchase on inventory and cost of goods sold 14 Weighted average inventory--not appropriate for perpetual system 15 Goods shipped FOB destination are included in seller’s inventory 16 FIFO with falling prices--gives highest cost of goods sold 17 Specific identification--matches cost flow with physical flow 18 Goods shipped FOB shipping point are included in buyer’s inventory 19 FIFO--best approximates specific identification in manufacturing 20 LIFO with rising prices gives lowest reported net income 21 Journal entry when merchandise is returned under perpetual system 22 Inventory valuation under LIFO versus FIFO 23 Dollar-value LIFO--specific identification cannot be used for layers 24 Perpetual inventory system 25 Double-extension and link-chain methods--variations of dollar-value LIFO 26 Goods in transit at year-end purchased FOB shipping point 27 Application of double extension 28 How warehouse costs and discounts affect inventory values 29 Periodic inventory method--trade discounts not reported separately 30 Journal entry when merchandise is defective under perpetual system 31 Weighted average inventory--not appropriate for perpetual system 11
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12 Chapter 8 Cost of Goods Sold and Inventory: Identification and Valuation 32 LIFO--appropriate for periodic or perpetual 33 FIFO--most closely reports current cost 34 Effect of decreasing inventory costs under FIFO and LIFO 35 FIFO with rising prices--same amount for perpetual and periodic 36 Dollar value LIFO--basis for computations 37 Determining the inventory method best for predicting future earnings 38 Ending inventory under the dollar-value LIFO method Computational Questions 39 Purchases made net of discount 40 Determination of net purchases with net and gross methods 41 Computation of purchase amount under gross method 42 Computation of FIFO cost of goods sold 43 Computation of cost of goods sold 44 Determination of accounts payable balance 45 Computation of FIFO periodic inventory 46 Computation of LIFO periodic inventory 47 Computation of LIFO perpetual inventory 48 Computation of FIFO perpetual inventory 49 Computation of weighted average periodic inventory 50 Computation of moving average perpetual inventory 51 Computation of number of days’ sales in average inventories 52 Computation of cost of goods sold 53 Computation of cost of merchandise available for sale 54 Computation of dollar-value LIFO inventory
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tbch08 - CHAPTER 8 Cost of Goods Sold and Inventory:...

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