Q 6.10: Phantom or paper profits can result in periods of inflation when a company is using the Q 6.11: Based on the net income of the shop, the sales staff at Francesca’ s Fashions receive performance bonuses. In periods of declining prices, which inventory costing method would bring the sales staff the most benefit? Q 6.12: When determining the cost of inventory items before lower-of-cost-or-market is applied, which of the following costing methods can be used? Q 6.13: How is market defined under the lower-of-cost-ormarket basis in valuing inventory? Q 6.14: An error was made with the physical count of goods on hand at the end of a period that resulted in a $ 25,000 overstatement of the ending inventory. What is the effect of this error on cost of goods sold and net income, respectively? Q 6.15: American Supply sold merchandise on account to Decker Plumbing on March 31. The sales price was $ 2,300, and the cost of goods sold was $ 1,500. Sales revenue was reported immediately, but the cost of goods sold was not reported until April 3. What happened to the net income for March as a result? Q 6.16: To compute the inventory turnover ratio, cost of goods sold should be divided by which of the following? Q 6.17: On December 31, 2012, Jameson reported the following numbers: beginning inventory $ 80,000; ending inventory $ 120,000; cost of goods sold $ 700,000; and sales $ 1,200,000. What was Jameson’ s inventory turnover in 2012? Q 6.18: Where should a company report inventory? Q 6.19: If beginning inventory is understated, which of the following will also be understated? Q 6.20: Managers at Birdie’ s Branch Removal, Inc. are confused because they maintain lower inventory amounts than the industry average, but they are a highly successful company, outselling even the big box companies in the chain saw market. Which of the following is the best answer to the managers’ confusion? Q 6.21: Simpson’ s Sandals, Inc. has five cases of flip-flops that have not been sold and are part of inventory for more than two years. Each case costs $ 300 and originally retailed for $ 500. Each case has a