1. Under the perpetual inventory system, freight paid by the company on a shipment from a supplier is recorded as a debit to a. accounts payable. b. inventory. c. freight-in. d. purchases discounts. 2. In valuing inventory under dollar-value LIFO, if end-ofyear inventory at end-of-year prices is $450,000 and the price index is 120 , end-of-year inventory at base-year prices is a. $375,000. b. $450,000. c. $540,000. d. $650,000. 3. When differences are discovered between a physical count of inventory and the computer-reported amount of inventory (under a perpetual inventory system), a. a company records the difference to the cost of goods sold account only. b. a company records the difference to both the cost of goods sold account and to an inventory over/short account. c. a company records the difference to both the inventory account and to an inventory over/short account. d. the company records the difference to the inventory account only. 4. LIFO Reserve is a. the amount of LIFO left over after a LIFO liquidation. b. a contra-revenue account. c. the amount of LIFO held over from one period to the next to offset any correction in federal income taxes. d. the same as the Allowance to Reduce Inventory to LIFO. 5. An account called Inventory Over/Short was introduced in the chapter. This account cannot be used if the company is using the method of inventory. a. Specific identification b. perpetual c. periodic d. LIFO cost