41 sam s auto parts uses the fifo costing method the following data is available uni 4352250

41.Sam’s Auto Parts uses the FIFO costing method. The following data is available:

UnitsUnit CostTotal Cost

Beginning inventory20$4,000$80,000



Sales during the year25

The ending inventory should be valued at





42.Apparatus Co. had beginning inventory of 50 units with a total cost of $1,000. During the period, Apparatus first purchased 20 units for $800 and then 30 units for $1,800. The company uses the LIFO method of costing inventory. If a physical count of ending inventory showed 45 units, at what amount would they be valued on the balance sheet?


b.$   900



43.The FIFO inventory cost method differs from the LIFO method in that the

a.LIFO method more clearly matches current inventory cost with sales revenue

b.FIFO method more clearly matches current inventory cost with sales revenue

c.LIFO method assumes the oldest purchases are stored in the rear of the storage areas

d.FIFO method is a more acceptable accounting method

44.If prices are rising steadily during an accounting period,

a.gross margin will be higher with LIFO than with FIFO

b.LIFO will ensure that the ending inventory is stated at or near current market values on the balance sheet

c.cost of goods sold will be closest to current costs with FIFO

d.LIFO will minimize income taxes

45.Product lines eliminated by a company due to the fact that they no longer generate profits are known as

a.discarded operations

b.discharged operations

c.abandoned operations

d.discontinued operations

46.Which of the following would NOT be reported as a separate item on the income statement, net of tax?

a.extraordinary item

b.discontinued operations

c.sale of inventory

d.change in accounting method

47.Which of the following items is reported on an income statement?

Income from                             Cash provided

Continuing operations              by operations

a.Yes                                 Yes

b.Yes                                 No

c.No                                  Yes

d.No                                  No

48.Which of the following is NOT a deduction on the income statement when computing net income?

a.loss from discontinued operations

b.cost of goods sold

c.interest expense

d.preferred dividends

49.Which of the following items is NOT considered a non-recurring item and reported separately from other items on the income statement?

a.loss from discontinued operations

b.extraordinary expenses

c.cumulative effect of accounting changes

d.net income before taxes

50.Identify the TRUE statement regarding non-recurring items on the income statement.

a.they are generally reported after operating income in order to highlight their special circumstances

b.the reporting of other revenue is an example of a non-recurring item

c.non-recurring items are excluded when computing earnings per share and when computing earnings available for common stockholders

d.most non-recurring items have no significant effect on net income

51.When a company changes from using one generally accepted accounting method to using another generally accepted accounting method, the effects of that change are reported in a special section on the

a.the income statement only

b.the balance sheet only

c.the statement of cash flows only

d.all of the financial statements

52.In order for an event to be reported on the income statement as an extraordinary item, it must be

Unusual     Infrequent

a.Yes             Yes

b.Yes             No

c.No              Yes

d.No              No

53.Duhany Auto Company sold off a major segment of its business during March of 2007 at a loss. The loss from the sale should be reported in the firm's financial statements as a(n)

a.extraordinary item

b.discontinued operation

c.subsequent event

d.change in accounting method

54.A loss from a natural disaster that is both unusual and infrequent should be reported on a company's income statement

a.as part of the computation of operating income

b.as part of the computation of pretax income

c.as part of the computation of net income

d.after net income

55.Discontinued operations, extraordinary items, and cumulative effects are all similar in that they

a.result in an increase in net income for the period reported

b.have no effect on the cash flow statement (have no cash flow consequences)

c.are all reported separately on the income statement

d.all are caused by management having made poor decisions in the past


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