Question

26 An everstatement of ending ivry wll e A An overstatement of asts and ty n e balanee sheet B.An understatement of amet and eqity on the balance sheet. CAaoverstatement of s D. An understatement of ats and an atement of equity on the balance sheet E No effect on the balance sheet sets and an uderstatement of equity on the balance sheet 27. The investery valeation method tet deetie ch item in ending inventory with a specific parchase and inveice is the A Weighted average inventory method B.First-in, first-out method. C Last-in, first-out method D. Specifie identification method E. Retail inventory method 28. A company had inventory on November 1 of 5 anits at a cost of $20 cach. On November 2, they purchased 10 anits at $22 each. On November 6 they purchased 6 units at $25 each. On November 8, 8 units were sold for $55 each. Using the LIFO perpetual inventory method what was the value of the inventory on November 8 after the sale? A. 5304 B. S296 C $288 D. 5280 E. $276 29. A company has inventory of 10 units at a cost of S10 each on June 1. On June 3, it purchased 20 units at $12 each. 12 units are sold on June 5. Using the FIFO perpetual inventory method, what is the cost of the 12 units that were sold? A. S120 B.S124 C. $128 D. $130. E $140. 30. Generally accepted accounting principles require that the inventory of a company be reported at: A. Market value. B. Historical cost. C. Lower of cost or market. D. Replacement cost. E. Retail value.

Answer 1

26. A. Overstatement of ending inventory will lead to overstatement of asset and equity in the balance sheet.

27. D. Specific identification method.

28. E. 276 that is (8 units x 22) + (5 units x 20)

29. B. 124 that is (10 units x 10) + (2 units x 12)

30. C. Lower of cost or market value.