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  • ISBN-10 ‏ : ‎ 1118159640
  • ISBN-13 ‏ : ‎ 978-1118159644

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IFRS questions are available at the end of this chapter.

Answer No. Description
T 1. Work-in-process inventory.
F 2. Merchandising and manufacturing inventory accounts.
T 3. Modified perpetual inventory system.
F 4. Determining when title passes.
T 5. Inventory errors.
T 6. Overstatement of purchases and ending inventory.
F 7. Period vs. product costs.
T 8. Reporting Purchase Discounts Lost.
F 9. Cost flow assumption.
T 10. FIFO periodic vs. perpetual system.
T 11. LIFO Reserve.
F 12. Using LIFO for reporting purposes.
F 13. LIFO liquidation.
T 14. LIFO liquidations.
T 15. Dollar-value LIFO.
F 16. Dollar-value LIFO method.
F 17. LIFO-FIFO comparison.
T 18. LIFO conformity rule.
F 19. Selection of inventory method.
T 20. Appropriateness of LIFO.


Answer No. Description
c 21. Identify manufacturer inventory similar to merchandise inventory.
d 22. Sales with buyback agreement.
a 23. Sales with high rates of return.
a 24. Reason inventories are included in net income computation.
c 25. Characteristic of perpetual inventory system.
a 26. Reporting consignment inventory in balance sheet.
d 27. Reporting goods in transit purchased f.o.b. destination.
b 28. Effect of inventory error on net income.
b 29. Effect of goods in transit on the current ratio.
c 30. Description of consigned inventory.
d 31. Entries under perpetual inventory system.
b 32. Classification of goods in transit.
a 33. Classification of goods in transit.
MULTIPLE CHOICE—Conceptual (cont.)
Answer No. Description
d 34. Identify inventory ownership.
d 35. Identify a product financing arrangement.
a 36. Identify ownership under product financing arrangement.
b 37. Classification of goods on consignment.
c S38. Valuation of inventories.
b P39. Classification of beginning inventory.
b P40. Effect of beginning inventory overstated.
d S41. Effect of understating purchases.
b 42. Effect of recording merchandise on consignment.
a 43. Effect of ending inventory overvaluation.
a 44. Effect of inventory errors on income.
d 45. Effect of understating purchases and ending inventory.
b 46. Effect of beginning inventory overstatement.
c 47. Identification of a product cost.
d 48. Identification of a period cost.
d 49. Method used to record cash discounts.
a 50. Identification of inventory costs.
b 51. Identification of product costs.
d 52. Determine product costs.
b 53. Interest capitalization in manufacturing inventory.
d 54. Determine cost of purchased inventory, using net method.
a 55. Determine cost of purchased inventory, using gross method.
a 56. Recording inventory purchases at gross or net amounts.
c 57. Recording inventory purchases at gross or net amounts.
a 58. Nature of trade discounts.
d S59. Identifying inventoriable costs.
b P60. Method approximating current cost.
a 61. Average cost inventory valuation.
b 62. Weighted-average inventory method.
a 63. Nature of FIFO valuation of inventory.
b 64. Flow of costs in a manufacturing situation.
a 65. FIFO and decreasing prices.
b 66. FIFO and increasing prices.
a 67. FIFO and increasing prices.
b 68. FIFO and LIFO inventory assumptions.
c 69. LIFO and increasing prices.
d 70. Knowledge of inventory valuation methods.
d 71. Periodic and perpetual inventory methods.
c 72. Appropriateness of specific identification method.
b 73. FIFO and rising prices.
c 74. LIFO and falling prices.
a 75. LIFO reserve definition.
d 76. LIFO reserve account classification.
d 77. Specific-goods pooled LIFO approach.
c 78. Double-extension method under dollar-value LIFO.
d 79. Description of LIFO layer.
a S80. Dollar-value LIFO method.


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