57) Lorna Company has the following data available: Beginning inventory $170,000

Question

57) Lorna Company has the following data available: Beginning inventory $170,000 $400,000 $800,000 40% Net purchases Net sales Gross profit percentage The estimated cost of the ending inventory using the gross profit m ethod is A) $90,000 B) $160,000 C) $480,000 D) $570,000 58) occurs when managers manipulate financial information and misrepresent the firm's financial position and performance. A) Earnings management B) GAAP C) Judgment D) Decision-making 59) Goodwill is recorded as an intangible asset when A) the fair value of a company's assets exceed carrying value of those assets B) the fair value of a company's assets are greater than the cost of acquiring that company C) a company's exceptional quality, reputation, or capability enables it to generate exceptional earnings D) one company acquires another company 60) Construction costs for fences and driveways are reported on the statement of inancial position as A) current assets B) intangible assets C) land D) land improvements Anakwe-Intermediate I, Fall 2017 Final Exam 15 1 Page

Explanation / Answer

57.

Cost of goods available for sales = Beginning inventory + Net purchases

= $170,000 +$400,000

= $570,000

Cost of goods sold = (1-Gross profit %) * Net Sales

= (1 - 40%) * $800,000

= $480,000

Ending inventory = Cost of goods available for sales - Cost of goods sold

= $570,000 - $480,000

= $90,000

Hence, the correct answer is option A)$90,000

58) A. Earnings management

59) B. The fair value of the company's asset is greater than the cost of acquiring that company

60) D. land improvements

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