Question 1.1.Adams Company is a retailer and uses a perpetual inventory system. Which statement is correct? (Points : 1)

Returns of merchandise inventory by Adams Company to a manufacturer are credited to Inventory. Freight paid to get merchandise inventory to Adams Company's store is debited to Freight Expense. A return of merchandise inventory by one of Adams Company's customers is credited to Inventory. Discounts taken by Adams Company's customers are credited to Inventory.

Question 2.2.Orange-Aide Company has the following inventory data:

	July 1		Beginning inventory	20 units at $20	$ 400
	7		Purchases	70 units at $21	1,470
	22		Purchases	10 units at $22	220
					$2,090

A physical count of merchandise inventory on July 30 reveals that there are 30 units on hand. Using the average cost method, the value of ending inventory is (Points : 1)

$600 $627 $630 $660

Question 3.3.Apple-A-Day Company has the following inventory data:

	July 1		Beginning inventory	20 units at $20	$ 400
	7		Purchases	70 units at $21	1,470
	22		Purchases	10 units at $22	220
					$2,090

A physical count of merchandise inventory on July 30 reveals that there are 30 units on hand. Using the LIFO inventory method, the amount allocated to cost of goods sold for July is (Points : 1)

$1,480 $1,470 $1,450. $1,430.

Question 4.4.Two companies report the same cost of goods available for sale but each employs a different inventory costing method. If the price of goods has increased during the period, then the company using (Points : 1)

LIFO will have the highest ending inventory. FIFO will have the highest cost of goods sold. FIFO will have the highest ending inventory. LIFO will have the lowest cost of goods sold.

Question 5.5.In periods of rising prices, which is an advantage of using the LIFO inventory costing method? (Points : 1)

Ending inventory will include latest (most recent) costs and thus be more realistic. Cost of goods sold will include latest (most recent) costs and thus will be more realistic. Net income will be the highest and thus reflect the prosperity of the company. Phantom profits are reported.

Question 6.6.In a period of increasing prices, which inventory flow assumption will result in the lowest amount of income tax expense? (Points : 1)

FIFO LIFO Average Cost Method Income tax expense for the period will be the same under all assumptions.

Question 7.7.Inventory costing methods place primary reliance on assumptions about the flow of (Points : 1)

good. costs. resale prices. values.

Question 8.8.Which sales accounts normally have a debit balance? (Points : 1)

Sales discounts Sales returns and allowances. both (a) and (b). Neither (a) nor (b).

Question 9.9.Sales revenues are usually considered earned when (Points : 1)

cash is received from credit sales. an order is received. goods have been transferred from the seller to the buyer. adjusting entries are made.

Question 10.10.In a period of rising prices, which of the following inventory methods generally results in the lowest net income figure? (Points : 1)

Average Cost Method LIFO method FIFO method Need more information to answer