1. When identical units of an item are purchased at different costs, an inventory cost flow method

a.must be used under a perpetual inventory system only.

b.must be used under both a perpetual and a periodic inventory system.

c.is not used under either a perpetual or a periodic inventory system.

d.must be used under a periodic inventory system only.

2. Determine the gross profit using the periodic inventory system and the LIFO inventory method, assuming that 18 units were sold at a sales price of $14.

Date	Item	Units	Cost	Total
January 1	Beginning inventory	5	$3	$15
January 12	Purchase	10	4	40
January 18	Purchase	8	5	40
	Totals	23		$95

a.$80

b.$172

c.$182

d.$95

3. Regarding consigned inventory,

a.the manufacturer is the consignor.

b.the unsold merchandise is part of the consignee's records at year-end.

c.the consignee retains the title to the inventory.

d.the retailer is the consignor.

4. Determine the value of the inventory at the lower of cost or market.

Item	Inventory Quantity	Cost per Unit	Market Value per Unit (Net Realizable Value)
S	3	$34	$30
T	2	28	30

a.$158

b.$102

c.$146

d.$150

5. Several controls are used to safeguard inventory, and one of those is to

a.allow all employees access to the materials warehouse.

b.allow one employee to order inventory, check in shipments, and stock shelves with inventory to prevent errors.

c.hire security guards.

d.keep low-priced inventory behind lock and key.

6.Merchandise inventory is found on the balance sheet as a

a.long-term liability.

b.current asset.

c.long-term asset.

d.current liability.

7. Marcos Industries uses the retail method of inventory costing. The retail value of the inventory is $478,000. If the ratio of cost to retail price is 60%, what amount of inventory is reported on the financial statements?

a.$191,200

b.$286,800

c.$478,000

d.Cannot be determined from the information given.

8. Determine the ending inventory using the periodic inventory system and the weighted average cost method (rounded to the nearest cent), assuming that 18 units were sold at a price of $14.

Date	Item	Units	Cost	Total
June 1	Beginning inventory	6	$5	$30
June 12	Purchase	10	6	60
June 18	Purchase	8	7	56
	Totals	24		$146

a.$36.48

b.$145.92

c.$109.44

d.$56.00

9. Several controls are used to safeguard inventory except

a.allowing all employees access to the materials warehouse.

b.installing sensors at all exits.

c.hiring security guards.

d.keeping high-priced inventory behind lock and key.

10. When using the periodic FIFO inventory cost method, which of the following statements is correct?

a.The physical count determines the inventory on hand.

b.The cost of merchandise sold is made up of the earliest purchases.

c.The cost of merchandise on hand is made up of the most recent costs.

d.All of these choices are correct.