1. The gross margin method of determining an inventory produces precisely accurate results.

A. True

B. False

2. The retail inventory method can be used at the end of any period except the end of the fiscal year.

A. True

B. False

3. On January 1, 2007, Nichols Companys inventory of Item X consisted of 2,000 units that cost $8 each. During 2007 the company purchased 5,000 units of Item X at $10, each, and it sold 4,500 units. Periodic inventory procedure is used. Cost of goods sold using FIFO is:

A. $45,000.

B. $36,000.

C. $41,000.

D. None of these.

4. On January 1, 2007, Nichols Companys inventory of Item X consisted of 2,000 units that cost $8 each. During 2007 the company purchased 5,000 units of Item X at $10, each, and it sold 4,500 units. Periodic inventory procedure is used. Cost of goods sold using LIFO is:

A. $20,000.

B. $36,000.

C. $45,000.

D. $25,000.

E. None of these.

5. = If the ending inventory is understated by $150, the cost of goods sold will be:

A. overstated by $300.

B. overstated by $250.

C. overstated by $150.

D. understated by $250.

E. understated by $150.