Question

40.

40. Inventory is reported on the balance sheet statement at:

Select one:

a. Cost

b. Market value

c. Lower of cost or market value

d. None of the above

41. A perpetual inventory system offers all the following advantages except:

Select one:

a. inventory balances are always current

b. it is less expensive than a periodic system

c. it enhances internal control

d. it helps sales people determine whether there is a sufficient supply of inventory on hand to fill customer orders

42. Given the following data, calculate the cost of ending inventory on 12/31/2018 using a periodic inventory system and a LIFO cost flow assumption:

1/1               Beginning inventory          50 units at $10 per unit
3/5               Purchases                         50 units at $12 per unit
5/30             Purchases                         40 units at $13 per unit
10/25           Purchases                         60 units at $14 per unit

12/31           Ending inventory               35 units

Select one:

a. $380

b. $490

c. $350

d. $420

Answer 1

Q40. Always inventory will report at balance sheet at net realizable value. other wise chances are there to show over reporting of inventory value.

So, answer will be: c. Lower of cost or market value

Q41. Under perpetual inventory system, purchase or sale of goods will be updated on time in inventory account. so balances in inventory account will be upto date.

Answer will be: a. inventory balances are always current

Q42. Under LIFO method, last purchased inventories will use for first sale

	Units	Rate	Amount
Balance from Beginning inventory	35	$   10	$           350
Ending inventory	35		$           350

Answer is C. $350