BUS251Chapter 7 Quiz.docx

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Department
Business Administration
Course
BUS 251
Professor
Anne Mac Donald
Semester
Fall

Description
BUS 251: Chapter 7 Quiz 1. In Canada, inventory is always carried on the balance sheet at its net realizable value. A. True False B. 2. A company has inventory that originally cost $10,000. Given recent changes in the marketplace, the inventory will now be able to be sold for only $8,000. The inventory on the balance sheet should be presented at $8,000. A. True B. False 3. The inventory turnover ratio is expected to be higher for grocery retailers than jewellery stores. True A. False B. 4. The two cost flow assumptions that can be used to calculate cost of goods sold and ending inventory are the moving average method and the last in, first out method. A. True False B. 5. Acquisition costs, such as freight, can be included in the total cost of inventory to be presented on the balance sheet. A. True B. False 1. Inventory can be situation dependent. Which of the following would not be considered inventory? A. Land owned by a property developer. B. Aluminum cans owned by a recycler. C. A delivery truck owned by a moving company. D. Brake pads owned by an automotive service outlet. 2. In Canada, under normal circumstances, inventory should be valued using the following method: Laid-down cost. A. B. Replacement cost. C. Lower of Cost or Net Realizable Value. D. Lower of Replacement Cost or Net Realizable Value. 3. Which of the following could not be included in the “Laid-down” cost of inventory? A. Freight in (shipping costs from the supplier). B. Import taxes (duties). C. Provincial Sales Tax (PST) paid on purchases. None of the above (all could be included in laid down cost). D. 4. A grocery store that maintains a 'physical inventory system' keeps track of: A. the number of units of inventory. B. the unit cost of items in inventory. C. the number of units in inventory and their unit costs. D. the number of units in inventory and the total cost of inventory. 5 Excerpts from the financial statements of George's Groceries Ltd. for the year ending . December 31, 2011 are as follows: Sales revenue $310,000 Cost of goods sold expense $188,000 Inventory 12/31/2011 $44,000 Inventory 12/31/2010 $54,000 How much inventory did George's Groceries Ltd. purchase during 2011? A. $232,000. B. $188,000. C. $178,000. D. None of the above is correct. 6. Which of the following is not an advantage of using a perpetual inventory system instead of a periodic inventory system? A. It provides more up-to-date information for decision-making. B. A cost of goods sold figure can be obtained at any point in time during the period. An estimate of the number of units on hand can be obtained at any point in time C. during the period. D. There is no need to do a physical inventory count. 7. When the cost of purchasing inventory from suppliers is increasing, the method that will result in a company reporting the lowest net income is: specific identification. A. moving average. B.
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