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Chp 6 WILEYPLUS self test

True
When the terms of a sale are FOB destination, legal title to the goods passes to the buyer when they reach the buyer’s place of business.
False
Merchandising firms usually classify their inventory into raw materials, work in process and finished goods.
True
Under FIFO, cost of goods sold consists of the units with the oldest costs.
False
In a period of inflation, LIFO produces a higher net income than FIFO.
false
The days in inventory is calculated by dividing the inventory turnover ratio by 365.
False
LIFO reserve is necessary for companies using the FIFO inventory method.
True
If Inventory in 2006 is $30,000 and 2007 is $40,000 and Cost of Goods Sold is $276,000 and $290,000 respectively, the Inventory Turnover Ratio for 2007 is 8.3 times.
Equipment.
Which of the following is not an inventory account?
To keep the employees busy during a slow time in the business.
Which of the following is not a legitimate business reason for taking a physical inventory?
FOB destination
Ownership passes to the buyer when the goods are received from the public carrier if the goods are shipped:
FOB shipping point.
Ownership passes to the buyer when the public carrier accepts the goods if the goods are shipped:
Average cost.

Last-in, first-out.

First-in, first-out.

All of the above.

Which of the following is an acceptable inventory costing method?
first to be allocated to the cost of goods sold.
The FIFO inventory method assumes that the cost of the earliest units purchased are the
Jewelry store.
Which of the following would most likely employ the specific identification method of inventory costing?
FIFO.
In a period of rising prices which inventory method will result in the greatest amount of income tax expense?
6.0 times
The following information came from the income statement of the Wilkens Company at December 31, 2010: sales $1,800,000; beginning inventory $160,000; ending inventory $240,000; and gross profit $600,000. Wilkens’ inventory turnover ratio for 2010 is:
60.8 days.
The following information came from the income statement of the Wilkens Company at December 31, 2010: sales $1,800,000; beginning inventory $160,000; ending inventory $240,000; and gross profit $600,000. Wilkens’ days in inventory for 2010 is:
A manufacturing company would normally have raw materials, work in process, and finished goods as inventory account classifications.
From the choices below, select the one correct response.
Specific identification method inventory valuation requires physical flow of goods to be representative of the cost flow.
From the choices below, select the one correct response.
Company management selects the method – FIFO, LIFO, or specific identification method, of inventory valuation a company will use.
From the choices below, select the one correct response.
LIFO provides the closest valuation of cost of goods sold to replacement cost of inventory sold
With the assumption of costs and prices generally rising, select the correct statement from the following.
assets are overstated and stockholders’ equity is overstated.
If the ending inventory is overstated then:

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