II. Matching 1/2 point for each question-8 points Select the term that best fits
ID: 2591814 • Letter: I
Question
II. Matching 1/2 point for each question-8 points
Select the term that best fits each of the following definitions and descriptions:
a.
Product costs
b.
Consigned goods
c.
LIFO reserve
d.
Net method
e.
Dollar-value LIFO inventory method
f.
Factory overhead
g.
Double extension
h.
Trade discount
i.
Perpetual inventory system
j.
FIFO
k.
LIFO
l.
FOB destination
m.
Gross method
n.
Work in process
o.
LIFO conformity rule
p.
LIFO inventory pools
q.
Specific identification
r.
Periodic inventory system
s.
Raw materials
t.
Period costs
u.
FOB shipping point
____ 21. Terms under which title to merchandise transfers to the purchaser when the goods are received.
____ 22. A method of inventory valuation that reports inventory after consideration of any purchase discounts.
____ 23. A discount that converts a list price to the price a purchaser is actually charged.
____ 24. A technique used with dollar-value LIFO to compute the ending inventory at base-year prices.
____ 25. The classification of inventory into items having common characteristics. The LIFO historical cost method is then applied to each grouping.
____ 26. All manufacturing costs except direct materials and direct labor.
____ 27. Inventory that is partially processed and requires additional work before it can be sold.
____ 28. A cost flow assumption that normally approximates the actual physical flow of the merchandise.
____ 29. A regulation that requires the use of LIFO for financial reporting purposes if LIFO is used for income tax purposes.
____ 30. The inventory method that matches the cost flow to the physical flow of the asset.
____ 31. A valuation method that reports the inventory cost before the consideration of purchase discounts.
____ 32. Records that provide a continuous summary of inventory activity.
____ 33. Costs that are recognized as expenses during the period in which they are incurred.
____ 34. The historical cost flow assumption that best matches current cost to current revenues.
____ 35. Inventory that is physically located at a dealer, but the title is retained by the shipper until the merchandise is sold.
a.
Product costs
b.
Consigned goods
c.
LIFO reserve
d.
Net method
e.
Dollar-value LIFO inventory method
f.
Factory overhead
g.
Double extension
h.
Trade discount
i.
Perpetual inventory system
j.
FIFO
k.
LIFO
l.
FOB destination
m.
Gross method
n.
Work in process
o.
LIFO conformity rule
p.
LIFO inventory pools
q.
Specific identification
r.
Periodic inventory system
s.
Raw materials
t.
Period costs
u.
FOB shipping point
Explanation / Answer
21. Terms under which title to merchandise transfers to the purchaser when the goods are received.
Solution: FOB destination
Explanation: FOB destination refers that the buyer will take the delivery of goods being shipped to it by a supplier when the goods arrive at the buyer's receiving dock, thus will not be on the balance sheet
22. A method of inventory valuation that reports inventory after consideration of any purchase discounts.
Solution: Net method
Explanation: The net method refers to a method to record the purchases of inventory with a cash discount.
23. A discount that converts a list price to the price a purchaser is actually charged.
Solution: Trade discount
Explanation: Trade discount is given on the retail price of something that permits the traders or to a retailer by a wholesaler.
24. A technique used with dollar-value LIFO to compute the ending inventory at base-year prices.
Solution: Double extension
Explanation: Double extension refers to a method used with dollar-value LIFO for calculating the ending inventory at base-year prices.
25. The classification of inventory into items having common characteristics. The LIFO historical cost method is then applied to each grouping.
Solution: LIFO inventory pools
Explanation: LIFO inventory pools is one of the method of classification of inventory into items having common characteristics
26. All manufacturing costs except direct materials and direct labor.
Solution: Factory overhead
Explanation: refers to total amount of cost involved in the production facilities of a manufacturing company that are not allowed to be traced directly to a product.
27. Inventory that is partially processed and requires additional work before it can be sold.
Solution: Work in process
Explanation: These are partially finished goods of a company waiting for completion
28. A cost flow assumption that normally approximates the actual physical flow of the merchandise.
Solution: FIFO
Explanation: Under FIFO the oldest inventory items are recorded as sold first
29. A regulation that requires the use of LIFO for financial reporting purposes if LIFO is used for income tax purposes.
Solution: LIFO conformity rule
Explanation: LIFO conformity rule states that to must use LIFO for financial reporting purposes if LIFO is used for income tax purposes
30. The inventory method that matches the cost flow to the physical flow of the asset.
Solution: Specific identification
Explanation: Specific identification is a method of calculating the ending inventory cost
31. A valuation method that reports the inventory cost before the consideration of purchase discounts.
Solution: Gross method
Explanation: The gross method records an invoice at full price and does not take into accout any cash discounts offered
32. Records that provide a continuous summary of inventory activity.
Solution: Perpetual inventory system
Explanation: Under Perpetual inventory system inventory accounts are updated after each purchase or sale.
33. Costs that are recognized as expenses during the period in which they are incurred.
Solution: Period costs
Explanation: A period cost refers to all those cost that cannot be capitalized into inventory, prepaid expenses, or fixed assets
34. The historical cost flow assumption that best matches current cost to current revenues.
Solution: LIFO
Explanation: Under LIFO the newest inventory items are recorded as sold first
35. Inventory that is physically located at a dealer, but the title is retained by the shipper until the merchandise is sold
Solution: Consigned goods
Explanation: Consigned goods refers to the merchandise which are not owned by the party in possession of the goods