KNOWLEDGE CHECK-UP 1. The following items should be included in merchandise inventory: a. Goods in transit with sales terms FOB destination b. Additional costs necessary to put inventory in a place and condition for sale c. Goods held by a consignee d. All of the above. 2. Under both a perpetual and a periodic inventory system goods must be counted at the end of the accounting per- iod for the following reason: a. Items that are damaged or obsolete can be identified through the count b. Merchandise inventory can be adjusted to reflect the actual inventory on hand at the end of the accounting period c. Lost or stolen items can be removed from the balance of inventory d. All of the above. 3. Costing methods are an important accounting policy choice for the following reasons: a. Once selected, companies must restate financial state- ments if they decide to change their accounting policy. b. The costing method used in a period of changing unit costs will impact ending inventory balances and cost of goods sold. c. In a period of rising prices, FIFO has a higher per unit cost held in ending inventory. d. All of the above. 4. Under the first-in, first-out inventory costing method: a. Inventory items are assumed to be sold in the order they are acquired. b. Inventory items are assumed to be purchased in the order they are acquired. c. Items in ending inventory do not reflect the most re- cent purchases. add. Average cost per unit is calculated after each sale of goods. 435