Chapter 7--Inventories Cost

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1、Chapter7--Inventories:CostMeasurementandFlowAssumptions3copyStudent:___________________________________________________________________________1.Foronlyamerchandiser,thesumofbeginninginventoryandnetpurchases,orproductioncosts,ofinventoryrepresentsthecostofgoo

2、dsavailableforsale.  True    False 2.Thecostofgoodssoldmodelforamanufactureris:BeginningFinishedGoodsInventory+Purchases(net)=CostofGoodsAvailableforSale-EndingFinishedGoodsInventory=CostofGoodsSold  True    False 3.Aperpetualinventorysystemprovidesmanagement

3、withvaluabletoolsinwhichtoplanandcontrolinventorylevelsbecausetheamountofinventoryisknownatanypointintime.  True    False 4.Netpurchasesiscomputedasfollows:NetPurchases=Purchases+Freight-out-PurchaseDiscountsTaken-PurchaseReturnsandAllowances  True    False 5

4、.WhenshippingFOBshippingpointthebuyerhaseconomiccontroloftheinventoryandmustrecordthegoodsinitsinventoryaccounts.  True    False 6.WhenshippingFOBshippingpointthesellerstillretainseconomiccontroluntilthegoodsarereceivedbythebuyer,thereforetheyshouldnotberecor

5、dedintoinventorybythebuyeruntilreceipt.  True    False 7.Inventorycostsincludeallcostsdirectlyorindirectlyassociatedwithbringinganitemtoitsexistingconditionorlocationforsale.  True    False 8.Thecostsofoperatingapurchasingdepartmentarenecessarytothepurchasing

6、ofinventorythereforethosecostsincurredshouldbeallocatedtoinventory.  True    False 9.Inaperiodoffallingprices,FIFOproducesthelowestcostofgoodssoldandthehighestgrossprofit.  True    False 10.InaperiodofrisingpricesLIFOproducesthehighestcostofgoodssoldandthelow

7、estgrossprofit.  True    False 11.TheLIFOconformityruleallowsacompanytouseFIFOforfinancialreportingandLIFOforincometaxes.  True    False 12.Acompany’sliquidationofinventoryunderLIFOresultsinhigherincomeduringperiodsofrisingcosts.Managementcanmanipulateearning

8、sbydelayingpurchasesuntilaftertheendofthefiscalyear.  True    False 13.Theuseofdollar-valueLIFOfollowsthesamemethodologyastheLIFOmethodbutreducestherecordkeeping.  True    False 14.Theuse