Question-1
The _________ method of depreciation allows a business to evenly distribute the cost of as asset over its useful life.
A. units of production
B. straight-line
C. sum-of-years'-digits
D. declining-balance
Question-2
_________ is used to depreciate assets when the actual service rendered by the asset is a more appropriate base for depreciation than its years of service.
A. declining-balance
B. sum-of-years'-digits
C. units of production
D. MACRS
Question-3
_________ property is land and generally anything that is erected on, growing on, or attached to the land.
A. Useful
B. Tangible
C. Intangible
D. Real
Question-4
An asset's purchase cost plus freight and/or installation charges required to place the asset into service is called the:
A. market value
B. salvage value
C. total cost
D. cost base
Question-5
Under MACRS, the type of recovery property being depreciated determines which _________ will be used to determine the recovery amount.
A. method
B. value
C. class
D. cost base
Question-6
The _________ system is also known as the General Depreciation System and applies to all tangible property placed in service after 1986.
A. asset valuation
B. fair market
C. modified accelerated cost recovery
D. residual value
Question-7
The book value at the end of an asset's useful life should always be equal to its _________ value.
A. residual
B. salvage
C. market
D. depreciated
Question-8
Under MACRS, the _________ treats all property as being placed in service on the midpoint of the years regardless of when the property is actually placed in service.
A. valuation schedule
B. depreciation schedule
C. half-year convention
D. cost base
Question-9
The _________ method of depreciation is considered an accelerated method of depreciating assets.
A. units of production
B. straight-line
C. modified production
D. declining-balance
Question-10
The _________ method of inventory valuation uses the quantity times price equals cost concept of the basic business transaction.
A. specific identification
B. original cost
C. specific cost
D. average cost
Question-11
The _________ method for determining the value of ending inventory closely resembles the way a company actually moves its physical inventory.
A. specific identification
B. FIFO
C. LIFO
D. inventory sold
Question-12
The _________ method uses the cost ratio to estimate the value of ending inventory.
A. retail
B. gross margin
C. average cost
D. specific cost
Question-13
Since continuous inventory systems are not common, most businesses use a _________ system.
A. current market value
B. periodic inventory
C. current cost estimate
D. specific identification
Question-14
_________ is a method used to value inventory that assumes purchases made during the first part of the year will be sold first.
A. Current cost estimate
B. Replacement value
C. LIFO
D. FIFO
Question-15
Goods that are owned by the business and held for resale are called:
A. stock.
B. merchandise.
C. materials.
D. inventory.
Question-16
The _________ method employs the percentage of sales revenues to determine cost of goods sold and the estimated value of ending inventory.
A. market value
B. replacement value
C. gross margin
D. cost estimate
Question-17
Inventory may be valued at either the cost of the unit or at the current market value – whichever is lower. The name of this rule is the _________ method.
A. valuation
B. market value
C. lower of cost or market
D. replacement value
Please use the following information to answer questions 9-10.
| Beginning Inventory | 600 units @ $3.50 per unit |
| Purchases: |
|
| January 20th | 1,200 units @ $4.00 per unit |
| February 20th | 1,500 units @ $3.76 per unit |
| March 20th | 1,000 units @ $3.80 per unit |
| Ending Inventory | 800 units |
Question-18
Using the average cost method, what is ending inventory valued at?
A. $2,976.42
B. $3,040.00
C. $3,999.00
D. $4,694.12
Question-19
If the current market value of the good was $3.75 per unit on March 30 (when ending inventory for the quarter was recorded), and the lower-of-cost-or-market method is used, then the value of ending inventory:
A. would not change.
B. would increase by $40.
C. would decrease by $40.
D. would decrease by $400.
Please use the following information to answer questions 11-13.
A firm has the following inventory information for the first quarter:
| 01/01 | Beginning Inventory | 50 units @ $5 |
| 01/15 | Purchases | 80 units @ $5.50 |
| 02/15 | Purchases | 60 units @ $5.25 |
| 02/15 | Purchases | 40 units @ $5.75 |
|
| Sales | 170 units @ $10 |
|
| Total operating expenses | $500 |
Question-20
What is ending inventory under FIFO?
A. $305
B. $322.17
C. $335
D. $350
Question-21
What is the cost of goods sold under FIFO?
A. $770
B. $800
C. $900
D. $930
Question-22
What is net profit under LIFO?
A. $250
B. $270
C. $300
D. $330
Please use the following information for questions 14-15.
Mahalyk's Water Fun Shoppe specializes in jet skis. Mahalyk's inventory records showed the following for the past year.
| Purchase Date | Number of Jet Skis | Cost Per Jet Ski |
| February 10 | 30 | $4,000 |
| May 12 | 80 | $3,000 |
| June 15 | 20 | $3,500 |
| July 20 | 15 | $2,500 |
Question-23
Use the LIFO method to determine Mahalyk's value of ending inventory at the end of July if they had 70 jet skis left in inventory.
A. $230,625
B. $240,000
C. $255,000
D. $212,500
Question-24
Use the FIFO method to determine Mahalyk's value of ending inventory at the end of July if they had 70.5 jet skis left in inventory.
A. $230,625
B. $210,000
C. $255,000
D. $212,500
Question-25
Estimate the cost of ending inventory based on the retail method using the following information:
|
| Cost | Retail |
| Beginning Inventory | $ 600,000 | $ 800,000 |
| Purchases | $ 450,000 | $ 600,000 |
| Net Sales |
| $1,000,000 |
A. $150,000
B. $262,500
C. $300,000
D. $750,000
Question-26
A firm has beginning inventory of $50,000 and purchases of $290,000 for an accounting period. Sales totaled $400,000, and typical gross margin as a percentage of sales has been 30%. Using the gross margin method, what is the estimated ending inventory?
A. $60,000
B. $75,000
C. $90,000
D. $120,000
Question-27
Determine the cost ratio (retail method) for Twilight Games and Comics Store if the cost of goods available for sale is $36,000 and the retail value of goods available for sale is $90,000 (round to the nearest one-thousandth).
A. 2.500
B. 0.667
C. 0.400
D. 2.000
Question-28
Estimate the cost of ending inventory for August for Roman's Jewelry Store using the retail method on the following data:
|
| Cost | Retail |
| Beginning inventory for August | $180,000 | $288,000 |
| Purchases during August | $70,000 | $112,000 |
| Net sales during August |
| $80,000 |
A. $50,000
B. $156,250
C. $200,000
D. $128,000
Question-29
Herman's Confectionery Shoppe has a beginning inventory at cost of $22,000, and purchases at cost of $5,000 during the month of February. Retail sales for February were $8,000 and the gross margin for the month was assumed to be 45%. Estimate the value of ending inventory for February.
A. $4,400
B. $3,600
C. $22,600
D. $18,400
