Chapter 8 – Multiple Choice

Inventory accounts should be classified in which section of a balance sheet?

Ritz Company agreed to purchase certain inventory items from Hostess Corporation. Hostess shipped the goods F.O.B. destination. On December 31, Ritz’s accounting year-end, Ritz was aware that the goods had been shipped and would be received any day.

Hefty Company wants to know the effect of different inventory methods on financial statements. Given below is information about beginning inventory and purchases for the current year.

Sales during the year were 2,700 units at $5.00. If Hefty used the first-in, first-out method, ending inventory would be:

Hefty Company wants to know the effect of different inventory methods on financial statements. Given below is information about beginning inventory and purchases for the current year.

Sales during the year were 2,700 units at $5.00. If Hefty used the periodic LIFO method, cost of goods sold would be:

Hefty Company wants to know the effect of different inventory methods on financial statements. Given below is information about beginning inventory and purchases for the current year.

Sales during the year were 2,700 units at $5.00. If Hefty used the weighted-average method, gross profit would be:

Which of the following inventory methods will always produce the same results under both a periodic and perpetual system?

An inventory pricing procedure in which the oldest costs incurred rarely have an effect on the ending inventory valuation is:

Wonder Corporation uses a periodic inventory system and correctly recorded all inventory purchases during the year. Beginning inventory was correctly measured. However, in the process of taking a physical inventory at the end of the year, the accountants double-counted one warehouse, resulting in an overstatement of ending inventory by $2,000,000. This overstatement of ending inventory had what impact on assets, liabilities, income, and retained earnings, respectively?