Reference no: EM132484777

Question 1: If a company has three lots of products for sale, purchase 1 (earliest) for $17, purchase 2 (middle) for $15, purchase 3 (latest) for $12, which of the following statements is true?

Option 1: This is a deflationary cost pattern.

Option 2: This is an inflationary cost pattern.

Option 3: The next purchase will cost less than $12.

Option 4: None of these statements can be verified.

Question 2: If goods are shipped FOB destination, which of the following is true?

Option 1: FOB indicates that a price reduction has been applied to the order.

Option 2: Title to the goods will transfer as soon as the goods are shipped.

Option 3: The seller must pay the shipping.

Option 4: The seller and the buyer will each pay 50% of the cost.

Question 3: When would using the FIFO inventory costing method produce higher inventory account balances than the LIFO method would?

Option 1: deflationary times

Option 2: inflationary times

Option 3: never

Option 4: always

Question 4: Which type or types of inventory timing system (periodic or perpetual) requires the user to record two journal entries every time a sale is made.

Option 1: perpetual

Option 2: periodic

Option 3: neither periodic nor perpetual

Option 4: both periodic and perpetual

Question 5: Which inventory costing method is almost always done on a perpetual basis?

Option 1: first-in, first-out

Option 2: specific identification

Option 3: last-in, first-out

Option 4: weighted average

Question 6: Which of the following financial statements would be impacted by a current-year ending inventory error, when using a periodic inventory updating system?

Option 1: both statements

Option 2: balance sheet

Option 3: income statement

Option 4: neither statement

Question 7: Which of the following indicates a positive trend for inventory management?

Option 1: increasing cost of goods sold

Option 2: increasing sales revenue

Option 3: increasing inventory turnover ratio

Option 4: increasing number of days' sales in inventory ratio

Question 8: What is meant by the term gross margin?