Accounting & Business Questions

Accounting – Discussion Board, 13 Multiple Choice Questions & 7 WileyPlus Work Out Questions

Business – Startup Wars platform start-up business

The document is attached with the explanation

Accounting
Discussion Board
In Chapter 6, various topics surrounding the accounting for inventory are covered, which include
the different cost flow methods a company can use in accounting for their inventory (e.g. FIFO,
LIFO, and average cost), the impact errors in reporting inventory can have on a company’s
gross profit and overall profitability, and important metrics that can assist in the analysis of a
company’s inventory efficiencies (e.g. inventory turnover and days sales in inventory).
Required: Choose between the two scenarios below (A. or B.) and respond to the related
questions included in each scenario:
●
Charlie Gonzalez, the Chief Accounting Office (CAO) of Charlie’s Electronics Company,
is reviewing a trend of the company’s net income and profitability over the past three
years. In doing so, Charlie notes a pattern that raises concern: the company’s inventory
turnover has been trending upward while, at the same time, the company’s gross profit
has been declining. Charlie consults with his accounting team about this trend as he
believes there may be some irregularities causing this trend.
Questions:
●
Does Charlie have reason to be concerned? Why or why not?
●
What might be causing these concurrent trends (inventory turnover increasing, yet gross
profit declining?)
●
What steps might Charlie and his team take to address these concurring trends?
●
Charlie Gonzalez, the Chief Accounting Office (CAO) of Charlie’s Electronics Company,
is comparing the company’s performance against its main competitor, Bedilia’s Superior
Electrical Supplies Company. In his analysis, Carlie notes that his company uses the
FIFO method to account for its inventory, while Bedilia’s has chosen the LIFO method.
Both companies have used these methods consistently throughout all prior years.
Assume both Charlie and Bedilia are operating in an economic climate where the prices
of goods have been increasing.
Questions:
●
In assessing the profitability of these two companies (and based solely on the effects of
the inventory methods they have chosen to account for their inventories), which
company would you expect is more focused on increasing profits for its shareholders?
Why?
●
Which company appears to be more focused on reducing its tax liability to the
government? Why?
●
Which company is likely to present a more favorable inventory turnover? Why? What
other factors might contribute to a favorable inventory turnover?
Question 1
Eliza Company uses a periodic inventory system. Details for the inventory account for the month of
January are as follows:
Balance, 1/1
Purchase, 1/15
Purchase, 1/28
Units
200
100
100
Per unit price
$5.00
5.30
5.50
Total
$1,000
530
550
At the end of January, there were 150 units on hand (in inventory). If the company uses the LIFO
method, what is the value of the ending inventory?
a.
$850.
b.
$750.
c.
$805.
d.
$815.
Question 2
The managers of Venezia Company receive performance bonuses based on the net income of the firm.
Which inventory costing method are they likely to favor in periods of rising costs/prices?
a.
FIFO.
b.
LIFO.
c.
Average cost.
d.
Specific
identification.
Question 3
Which of the following would cause the inventory turnover to increase the most?
a
.
Decreasing the amount of inventory on hand and increasing sales (and increasing cost
of goods sold).
b
.
Increasing the amount of inventory on hand.
c
.
Keeping the amount of inventory on hand constant but increasing sales (and increasing cost of
goods sold).
d
.
Keeping the amount of inventory on hand constant but decreasing sales (and decreasing cost
of goods sold).
Question 4
In periods of rising costs/prices, the inventory cost flow method that results in the lowest income taxes is
the:
a.
Gross profit method.
b.
FIFO method.
c.
LIFO method.
d.
Average-cost
method.
Question 5
Days in inventory is calculated by dividing:
a.
365 days by the inventory
turnover.
b.
cost of goods sold by 365 days.
c.
sales by 365 days.
d.
365 days by the inventory
turnover.
Question 6
The following cost and net realizable value information related to Barley Company’s product inventory is
presented below:
Product
A
B
C
Cost
$115,000
80,000
158,000
Net Realizable Value
$120,000
73,000
162,000
What is the amount of inventory Barley would report on its balance sheet, if the company
applies the lower-of-cost-or-net realizable value (LCNRV) basis in reporting its inventory?
a.
$346,000.
b.
$353,000.
c.
$362,000.
d.
$355,000.
Question 7
Cost of goods available for sale is allocated between:
a.
beginning inventory and cost of goods
purchased.
b.
beginning inventory and ending inventory.
c.
ending inventory and cost of goods purchased.
d.
ending inventory and cost of goods sold.
Question 8
In periods of rising costs/prices, FIFO will produce:
a.
lower ending inventory than LIFO.
b.
higher net income than LIFO.
c.
lower net income than LIFO.
d.
higher cost of goods sold than LIFO.
Question 9
Garzulo Company’s ending inventory is understated by $4,000. The effects of this error on the current
year’s cost of goods sold and net income, respectively, are:
a.
overstated; overstated.
b.
understated; understated.
c.
understated; overstated.
d.
overstated; understated.
Question 10
Which of the following equations yields cost of goods sold?
a.
Beginning inventory + cost of goods purchased – ending inventory.
b.
Sales – cost of goods purchased + beginning inventory – ending inventory.
c.
Sales + gross profit – ending inventory + beginning inventory.
d.
Beginning inventory – cost of goods purchased + ending inventory.
Question 11
The following information is available for Paul Company at 12/31/23:
Beginning inventory:
Ending inventory:
$
$
90,000
70,000
Cost of goods sold:
Sales:
$ 968,000
$1,360,000
Based on this information, Paul’s inventory turnover for 2023 was:
a.
12.1 times.
b.
17.0 times.
c.
13.8 times.
d.
10.8 times.
Question 12
Pasquale has the following inventory information for the month of July:
July
1
7
22
Beginning Inventory
Purchases
Purchases
20 units at $19
70 units at $20
10 units at $24
$ 380
1,400
240
$2,020
A physical count of inventory on July 31 reveals that there are 30 units on hand. Using the
average-cost method, the ending inventory value is:
a.
$630.
b.
$585.
c.
$606.
d.
$660.
Question 13
Which of the following should not be included in the physical inventory of a company?
a.
Goods shipped on consignment to another company.
b.
Goods held on consignment from another company.
c.
Goods accounted for on a periodic inventory basis.
d.
Goods in transit from another company shipped FOB shipping point.
The following questions are on Wiley Plus where I would
provide the login as a few of these questions has
different parts
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