1) Maintaining good controls over merchandise inventory ensures that inventory purchases and sales are properly authorized and accounted for by the accounting system.

True or False

3) Which of the following statements regarding FIFO isincorrect?

A.FIFO is consistent with the physical movement of inventory for most companies.

B.The first units to come in are assumed to be the first units sold.

C.FIFO is a specific identification costing method because companies sell their oldest inventory first.

D.Ending inventory is based on the costs of the most recent purchases.

4) A company uses theweighted-average method of inventory valuation under a periodic inventory system. The company began the year with a zero inventory balance. They had the following transactions during the year.

1.Purchased 65 units at$6 per unit

2.Purchased 130 units at$6 per unit

3.Sold 110 units at$12 per unit

4.Purchased 60 units at$7 per unit

5.Sold 110 units at$13.25 per unit

At the end of theyear, the company counted the inventory and found 35 units remaining. Calculate the cost of goods sold for the year.(Round the unit costs to two decimal places and total costs to the nearestdollar.)

A.$1,372

B.$1,590

C.$6

D.$218

5) When a company uses thelast-in, first-out(LIFO) method, the cost of goods sold represents the costs of most recently purchasedgoods, and the ending inventory represents the oldest costs.

True

False

6) Which of the following states that a company must perform strictly proper accounting only for items that are significant to thebusiness's financialstatements?

A.disclosure principle

B.conservatism

C.consistency principle

D.materiality concept

7) Inventory turnover is computed by dividing average merchandise inventory by cost of goods sold.

True

False

8) Assume Nile.com began April with 14 units of inventory that cost a total of $266. During April, Nile.com purchased and sold goods as follows:

Apr. 8 Purchase 42 units@ $ 20

14 Sale 35 units@ $ 40

22 Purchase 28 units@ $ 22

27 Sale 42 units@ $ 40

Under the FIFO inventory costing method and the perpetual inventorysystem, how much is Nile.com's cost of goods sold for the sale on April 14?

A.$1,106

B.$700

C.$1,400

D.$ 686

9) Landers Company has 6 units in inventory on December 31. The units were purchased in November for $200 each. The price lists from suppliers indicate the current replacement cost of the item to be $198 each. What is the effect on gross profit if Landers values its ending merchandise inventory using the lowerofcostormarket rule?

A.The gross profit would not be affected.

B.The gross profit would increase by $12.

C.The gross profit would increase by $2.

D.The gross profit would decrease by $12.

12) Kim's Retail had 500 units of inventory on hand at the end of the year. These were recorded at a cost of$17 each using thelast-in, first-out(LIFO) method. The current replacement cost is$14 per unit. The selling price charged byKim's Retail for each finished product is$24. In order to record the adjusting entry needed under thelower-of-cost-or-market rule, the Merchandise Inventory will be________.

A.debited by$7,000

B.credited by$1,500

C.credited by$7,000

D.debited by$1,500

13) Which of the following inventory costing methods yields the lowest cost of goods sold during a period of rising inventorycosts?

A.weighted-average

B.last-in, first-out

C.first-in, first-out

D.specific identification

15) Roadside Company had the following balances and transactions during2018:

Beginning Merchandise Inventory 30 units at$74

March 10 Sold 28 units

June 10 Purchased 60 units at$84

October 30 Sold 54 units

What is the amount of thecompany's ending MerchandiseInventory, as disclosed in the December31, 2018 balancesheet, using the periodic LIFO inventory costingmethod?

A.$504

B.$592

C.$444

D.$672

16) When a company uses thefirst-in, first-out(FIFO) method, the cost of goods sold represents the cost of the most recently purchased goods and the value of ending inventory represents the cost of the oldest goods in stock.

True

False

17) A lowerdays' sales in inventory for SamsonCompany, when compared to othercompanies, indicates that it is________.

A.incurring higher insurance costs

B.selling its inventory more quickly

C.holding excess obsolete inventory

D.spending more on inventory storage

18) Lower-of-cost-or-market (LCM) requires that merchandise inventory be reported in the financial statements at the lower of the historical cost or the current selling price of the inventory.

True

False

19) In a period of risingcosts, thefirst-in, first-out(FIFO) method results in a higher cost of goods sold and a lower gross profit than thelast-in, first-out(LIFO) method.

True

False