Discussion Questions Before inventory purchases are recorded, the receiv- ing report should be reconciled to what documents? 1. 2. Why is it important to periodically take a physical inventory when using a perpetual inventory system? 3. Do the terms FIFO, LIFO, and wetghted average refer to techniques used in determining quantities of the various classes of merchandise on hand? Explain. 4. If merchandise inventory is being valued at cost and the price level is decreasing, which of the three methods of costing-FIFO, LIFO, or weighted aver- age cost-will yield (a) the highest inventory cost, (b) the lowest inventory cost, (c) the highest gross profit, and (d) the lowest gross profit