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50.Which of the following is included in inventory costs?
a. Product costs.
b. Period costs.
c. Product and period costs.
d. Neither product or period costs.
51. Which of the following is correct?

a. Selling costs are product costs.
b. Manufacturing overhead costs are product costs.
c. Interest costs for routine inventories are product costs.
d. All of these.
52. All of the following costs should be charged against revenue in the period in which costs
are incurred except for
a. manufacturing overhead costs for a product manufactured and sold in the same
accounting period.
b. costs which will not benefit any future period.
c. costs from idle manufacturing capacity resulting from an unexpected plant shutdown.
d. costs of normal shrinkage and scrap incurred for the manufacture of a product in
ending inventory.
53. Which of the following types of interest cost incurred in connection with the purchase or
manufacture of inventory should be capitalized as a product cost?
a. Purchase discounts lost
b. Interest incurred during the production of discrete projects such as ships or real
estate projects
c. Interest incurred on notes payable to vendors for routine purchases made on a
repetitive basis
d. All of these should be capitalized.
54. The use of a Discounts Lost account implies that the recorded cost of a purchased
inventory item is its
a. invoice price.
b. invoice price plus the purchase discount lost.
c. invoice price less the purchase discount taken.
d. invoice price less the purchase discount allowable whether taken or not.
55. The use of a Purchase Discounts account implies that the recorded cost of a purchased
inventory item is its
a. invoice price.
b. invoice price plus any purchase discount lost.
c. invoice price less the purchase discount taken.
d. invoice price less the purchase discount allowable whether taken or not.
Use the following information for questions 56 and 57.
During 2012, which was the first year of operations, Oswald Company had merchandise
purchases of $985,000 before cash discounts. All purchases were made on terms of 2/10, n/30.
Three-fourths of the items purchased were paid for within 10 days of purchase. All of the goods
available had been sold at year end.
56. Which of the following recording procedures would result in the highest cost of goods
sold for 2012?
1. Recording purchases at gross amounts
2. Recording purchases at net amounts, with the amount of discounts not taken
shown under "other expenses" in the income statement
a. 1
b. 2
c. Either 1 or 2 will result in the same cost of goods sold.
d. Cannot be determined from the information provided.
57. Which of the following recording procedures would result in the highest net income for
2012?
1. Recording purchases at gross amounts
2. Recording purchases at net amounts, with the amount of discounts not taken
shown under "other expenses" in the income statement
a. 1
b. 2
c. Either 1 or 2 will result in the same net income.
d. Cannot be determined from the information provided.
58. When using the periodic inventory system, which of the following generally would not be
separately accounted for in the computation of cost of goods sold?
a. Trade discounts applicable to purchases during the period
b. Cash (purchase) discounts taken during the period
c. Purchase returns and allowances of merchandise during the period
d. Cost of transportation-in for merchandise purchased during the period
S
59. Costs which are inventoriable include all of the following except
a. costs that are directly connected with the bringing of goods to the place of business
of the buyer.
b. costs that are directly connected with the converting of goods to a salable condition.
c. buying costs of a purchasing department.
d. selling costs of a sales department.
P
60. Which inventory costing method most closely approximates current cost for each of the
following:
Ending Inventory Cost of Goods Sold
a. FIFO FIFO
b. FIFO LIFO
c. LIFO FIFO
d. LIFO LIFO
61. In situations where there is a rapid turnover, an inventory method which produces a
balance sheet valuation similar to the first-in, first-out method is
a. average cost.
b. base stock.
c. joint cost.
d. prime cost.
62. The pricing of issues from inventory must be deferred until the end of the accounting
period under the following method of inventory valuation:
a. moving average.
b. weighted-average.
c. LIFO perpetual.
d. FIFO.
63. An inventory pricing procedure in which the oldest costs incurred rarely have an effect
on the ending inventory valuation is
a. FIFO.
b. LIFO.
c. base stock.
d. weighted-average.
64. Which method of inventory pricing best approximates specific identification of the actual
flow of costs and units in most manufacturing situations?
a. Average cost
b. First-in, first-out
c. Last-in, first-out
d. Base stock
65. Assuming no beginning inventory, what can be said about the trend of inventory prices if
cost of goods sold computed when inventory is valued using the FIFO method exceeds
cost of goods sold when inventory is valued using the LIFO method?
a. Prices decreased.
b. Prices remained unchanged.
c. Prices increased.
d. Price trend cannot be determined from information given.
66. In a period of rising prices, the inventory method which tends to give the highest
reported net income is
a. base stock.
b. first-in, first-out.
c. last-in, first-out.
67. In a period of rising prices, the inventory method which tends to give the highest
reported inventory is
a. FIFO.
b. moving average.
c. LIFO.
68. Tanner Corporation's inventory cost on its balance sheet was lower using first-in, first-out
than it would have been using last-in, first-out. Assuming no beginning inventory, in
what direction did the cost of purchases move during the period?
a. Up
b. Down
c. Steady
d. Cannot be determined

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50.Which of the following is included in inventory costs?

51. Which of the following is correct?

Use the following information for questions 56 and 57.

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