Question 1

When the FIFO method is used, cost of merchandise sold is priced at

Accepted Answer

A)  the average cost. 
B)  the earliest cost. 
C)  the most recent cost. 
D)  none of these. 
A)  the average cost. 
B)  the earliest cost. 
C)  the most recent cost. 
D)  none of these. B

Question 2

FIFO is a method used to determine the quantity of each type of merchandise on hand.

Accepted Answer

A) True 
 B)False  False

Question 3

Select the one term that best fits each definition
-A form used during a physical inventory to record information about each item of merchandise on hand.

Accepted Answer

A)  first-in, first-out inventory costing method (FIFO) 
B)  gross profit method of estimating inventory 
C)  inventory record 
D)  last-in, first-out inventory costing method (LIFO) 
E)  lower of cost or market inventory costing method (LCM)
F) market value
G) stock ledger
H) stock record
I) weighted-average inventory costing method 
A)  first-in, first-out inventory costing method (FIFO) 
B)  gross profit method of estimating inventory 
C)  inventory record 
D)  last-in, first-out inventory costing method (LIFO) 
E)  lower of cost or market inventory costing method (LCM)
F) market value
G) stock ledger
H) stock record
I) weighted-average inventory costing method C

Question 4

Select the one term that best fits each definition
-Using the cost of merchandise purchased last to calculate the cost of merchandise sold first.

Accepted Answer

A)  first-in, first-out inventory costing method (FIFO) 
B)  gross profit method of estimating inventory 
C)  inventory record 
D)  last-in, first-out inventory costing method (LIFO) 
E)  lower of cost or market inventory costing method (LCM)
F) market value
G) stock ledger
H) stock record
I) weighted-average inventory costing method 
A)  first-in, first-out inventory costing method (FIFO) 
B)  gross profit method of estimating inventory 
C)  inventory record 
D)  last-in, first-out inventory costing method (LIFO) 
E)  lower of cost or market inventory costing method (LCM)
F) market value
G) stock ledger
H) stock record
I) weighted-average inventory costing method

Question 5

In periods of rising costs, the inventory method which gives the lowest possible ending inventory cost is the

Accepted Answer

A)  FIFO method. 
B)  LIFO method. 
C)  weighted-average method. 
D)  lower of cost or market inventory method. 
A)  FIFO method. 
B)  LIFO method. 
C)  weighted-average method. 
D)  lower of cost or market inventory method.

Question 6

When the LIFO method is used, ending inventory units are valued at

Accepted Answer

A)  the average cost. 
B)  the earliest cost. 
C)  the most recent cost. 
D)  none of these. 
A)  the average cost. 
B)  the earliest cost. 
C)  the most recent cost. 
D)  none of these.

Question 7

Select the one term that best fits each definition
-Using the average cost of beginning inventory plus merchandise purchased during a fiscal period to calculate the cost of merchandise sold.

Accepted Answer

A)  first-in, first-out inventory costing method (FIFO) 
B)  gross profit method of estimating inventory 
C)  inventory record 
D)  last-in, first-out inventory costing method (LIFO) 
E)  lower of cost or market inventory costing method (LCM)
F) market value
G) stock ledger
H) stock record
I) weighted-average inventory costing method 
A)  first-in, first-out inventory costing method (FIFO) 
B)  gross profit method of estimating inventory 
C)  inventory record 
D)  last-in, first-out inventory costing method (LIFO) 
E)  lower of cost or market inventory costing method (LCM)
F) market value
G) stock ledger
H) stock record
I) weighted-average inventory costing method

Question 8

Stock records do not reflect

Accepted Answer

A)  decreases in quantity on hand. 
B)  increases in quantity on hand. 
C)  the cost of the merchandise. 
D)  the balance on hand after each increase or decrease is recorded. 
A)  decreases in quantity on hand. 
B)  increases in quantity on hand. 
C)  the cost of the merchandise. 
D)  the balance on hand after each increase or decrease is recorded.

Question 9

A merchandise inventory that is larger than needed may decrease net income.

Accepted Answer

A) True 
 B)False

Question 10

Calculating an accurate inventory cost to assure that gross profit and net income are reported correctly on the income statement is an application of the accounting concept

Accepted Answer

A)  Adequate Disclosure. 
B)  Business Entity. 
C)  Consistent Reporting. 
D)  Perpetual Inventory. 
A)  Adequate Disclosure. 
B)  Business Entity. 
C)  Consistent Reporting. 
D)  Perpetual Inventory.

Question 11

Select the one term that best fits each definition
-Estimating inventory by using the previous year's percentage of gross profit on operations.

Accepted Answer

A)  first-in, first-out inventory costing method (FIFO) 
B)  gross profit method of estimating inventory 
C)  inventory record 
D)  last-in, first-out inventory costing method (LIFO) 
E)  lower of cost or market inventory costing method (LCM)
F) market value
G) stock ledger
H) stock record
I) weighted-average inventory costing method 
A)  first-in, first-out inventory costing method (FIFO) 
B)  gross profit method of estimating inventory 
C)  inventory record 
D)  last-in, first-out inventory costing method (LIFO) 
E)  lower of cost or market inventory costing method (LCM)
F) market value
G) stock ledger
H) stock record
I) weighted-average inventory costing method

Question 12

When using the perpetual inventory method,

Accepted Answer

A)  physical inventories are never taken. 
B)  day-to-day information about the quantity of merchandise on hand is not available. 
C)  it is not necessary to show the minimum balance on stock records. 
D)  a physical inventory should be taken at the end of the fiscal year. 
A)  physical inventories are never taken. 
B)  day-to-day information about the quantity of merchandise on hand is not available. 
C)  it is not necessary to show the minimum balance on stock records. 
D)  a physical inventory should be taken at the end of the fiscal year.

Question 13

Select the one term that best fits each definition
-Using the lower of cost or market value to calculate the cost of ending merchandise inventory.

Accepted Answer

A)  first-in, first-out inventory costing method (FIFO) 
B)  gross profit method of estimating inventory 
C)  inventory record 
D)  last-in, first-out inventory costing method (LIFO) 
E)  lower of cost or market inventory costing method (LCM)
F) market value
G) stock ledger
H) stock record
I) weighted-average inventory costing method 
A)  first-in, first-out inventory costing method (FIFO) 
B)  gross profit method of estimating inventory 
C)  inventory record 
D)  last-in, first-out inventory costing method (LIFO) 
E)  lower of cost or market inventory costing method (LCM)
F) market value
G) stock ledger
H) stock record
I) weighted-average inventory costing method

Question 14

Businesses frequently establish their fiscal year to end when inventory is at a minimum.

Accepted Answer

A) True 
 B)False

Question 15

Select the one term that best fits each definition
-A form used to show the kind of merchandise, quantity received, quantity sold, and balance on hand.

Accepted Answer

A)  first-in, first-out inventory costing method (FIFO) 
B)  gross profit method of estimating inventory 
C)  inventory record 
D)  last-in, first-out inventory costing method (LIFO) 
E)  lower of cost or market inventory costing method (LCM)
F) market value
G) stock ledger
H) stock record
I) weighted-average inventory costing method 
A)  first-in, first-out inventory costing method (FIFO) 
B)  gross profit method of estimating inventory 
C)  inventory record 
D)  last-in, first-out inventory costing method (LIFO) 
E)  lower of cost or market inventory costing method (LCM)
F) market value
G) stock ledger
H) stock record
I) weighted-average inventory costing method

Question 16

Companies that use a product's UPC code and a point-of-sale terminal

Accepted Answer

A)  should still take a physical inventory at least once each fiscal year. 
B)  eliminate the need for a physical inventory. 
C)  are assured of totally accurate inventory records at all times. 
D)  none of these. 
A)  should still take a physical inventory at least once each fiscal year. 
B)  eliminate the need for a physical inventory. 
C)  are assured of totally accurate inventory records at all times. 
D)  none of these.

Question 17

In periods of rising costs, the inventory method which gives the lowest cost of merchandise sold is the

Accepted Answer

A)  FIFO method. 
B)  LIFO method. 
C)  weighted-average method. 
D)  lower of cost or market inventory method. 
A)  FIFO method. 
B)  LIFO method. 
C)  weighted-average method. 
D)  lower of cost or market inventory method.

Question 18

The gross profit method of estimating inventory makes it possible to prepare monthly income statements without taking a physical inventory.

Accepted Answer

A) True 
 B)False

Question 19

Select the one term that best fits each definition
-The amount that must be paid to replace an asset.

Accepted Answer

A)  first-in, first-out inventory costing method (FIFO) 
B)  gross profit method of estimating inventory 
C)  inventory record 
D)  last-in, first-out inventory costing method (LIFO) 
E)  lower of cost or market inventory costing method (LCM)
F) market value
G) stock ledger
H) stock record
I) weighted-average inventory costing method 
A)  first-in, first-out inventory costing method (FIFO) 
B)  gross profit method of estimating inventory 
C)  inventory record 
D)  last-in, first-out inventory costing method (LIFO) 
E)  lower of cost or market inventory costing method (LCM)
F) market value
G) stock ledger
H) stock record
I) weighted-average inventory costing method

Question 20

A merchandise inventory that is smaller than needed may decrease net income.

Accepted Answer

A) True 
 B)False

Exam 20: Accounting for Inventory

When the FIFO method is used, cost of merchandise sold is priced at

FIFO is a method used to determine the quantity of each type of merchandise on hand.

Select the one term that best fits each definition -A form used during a physical inventory to record information about each item of merchandise on hand.

Select the one term that best fits each definition -Using the cost of merchandise purchased last to calculate the cost of merchandise sold first.

In periods of rising costs, the inventory method which gives the lowest possible ending inventory cost is the

When the LIFO method is used, ending inventory units are valued at

Select the one term that best fits each definition -Using the average cost of beginning inventory plus merchandise purchased during a fiscal period to calculate the cost of merchandise sold.

Stock records do not reflect

A merchandise inventory that is larger than needed may decrease net income.

Calculating an accurate inventory cost to assure that gross profit and net income are reported correctly on the income statement is an application of the accounting concept

Select the one term that best fits each definition -Estimating inventory by using the previous year's percentage of gross profit on operations.

When using the perpetual inventory method,

Select the one term that best fits each definition -Using the lower of cost or market value to calculate the cost of ending merchandise inventory.

Businesses frequently establish their fiscal year to end when inventory is at a minimum.

Select the one term that best fits each definition -A form used to show the kind of merchandise, quantity received, quantity sold, and balance on hand.

Companies that use a product's UPC code and a point-of-sale terminal

In periods of rising costs, the inventory method which gives the lowest cost of merchandise sold is the

The gross profit method of estimating inventory makes it possible to prepare monthly income statements without taking a physical inventory.

Select the one term that best fits each definition -The amount that must be paid to replace an asset.

A merchandise inventory that is smaller than needed may decrease net income.

The Accounting Equation

Debit and Credit Parts

Journalizing Transactions

Posting to a General Ledger

Cash Control Systems

Work Sheet and Adjusting Entries

Financial Statements for a Proprietorship

Closing Entries and Post-Closing

Accounting for Purchases and Cash Payments

Accounting for Sales and Cash Receipts

Using a General Journal

Preparing Payroll Records

Accounting for Payroll and Payroll Taxes

Uncollectible Accounts Receivable

Adjusting Entries and a Trial Balance

Financial Statements and Closing Entries

Financial Statement Analysis

Acquiring Capital for Growth and Development

Plant Assets and Intangible Assets

Accruals, Deferrals, and Reversing Entries

End-Of-Fiscal-Period Work for a Corporation

Accounting for Partnerships

Recording International and Internet Sales

Service Business Organized As a Proprietorship

Merchandising Business As a Corporation

Additional Accounting Procedures

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