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Chapter 5: Inventories and Cost of Sales

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Financial & Managerial Accounting
Pages: 226 - 275

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131 Questions for Chapter 5: Inventories and Cost of Sales

  1. What is the meaning of market as it is used in determining the lower of cost or market for inventory?

    Found on Page 259
  2. Martinez Company’s ending inventory includes the following items. Compute the lower of cost or market for ending inventory applied separately to each product.

    Found on Page 263
  3. Trey Monson starts a merchandising business on December 1 and enters into the following three inventory purchases. Also, on December 15, Monson sells 15 units for $20 each.

    Found on Page 260
  4. What guidance does the accounting constraint of conservatism offer?

    Found on Page 259
  5. Cruz Company uses LIFO for inventory costing and reports the following financial data. It also recomputed inventory and cost of goods sold using FIFO for comparison purposes.

    Found on Page 264
  6. Cruz Company uses LIFO for inventory costing and reports the following financial data. It also recomputed inventory and cost of goods sold using FIFO for comparison purposes.

    Found on Page 264
  7. Refer to the information in QS 5-10 and assume the perpetual inventory system is used. Determine the costs assigned to ending inventory when costs are assigned based on the LIFO method. (Round per unit costs and inventory amounts to cents.)

    Found on Page 260
  8. What factors contribute to (or cause) inventory shrinkage?

    Found on Page 259
  9. Vibrant Company had $850,000 of sales in each of three consecutive years 2016–2018, and it purchased merchandise costing $500,000 in each of those years. It also maintained a $250,000 physical inventory from the beginning to the end of that three-year period. In accounting for inventory, it made an error at the end of year 2016 that caused its year-end 2016 inventory to appear on its statements as $230,000 rather than the correct $250,000.

    Found on Page 264
  10. Vibrant Company had $850,000 of sales in each of three consecutive years 2016–2018, and it purchased merchandise costing $500,000 in each of those years. It also maintained a $250,000 physical inventory from the beginning to the end of that three-year period. In accounting for inventory, it made an error at the end of year 2016 that caused its year-end 2016 inventory to appear on its statements as $230,000 rather than the correct $250,000.

    Found on Page 264

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