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Multiple choice questions on periodic inventory system.
1. In a periodic inventory system, the cost of purchases is debited to:
- Cost of goods sold
- Accounts payable
2. In a period when prices are rising and inventory quantities are stable, the inventory method that would result in the highest ending inventory is:
- weighted average
- none of the above
3. Ending inventory is equal to the cost of items on hand plus:
- items in transit sold f.o.b. shipping point
- purchases in transit f.o.b. destination
- items in transit sold f.o.b. destination
- None of the above
4. A physical inventory count is taken when using which of the following inventory methods?
- both perpetual and periodic methods
5. The LIFO Conformity Rule states that if LIFO is used for:
- one class of inventory, it must be used for all classes of inventory
- tax purposes, it must be used for financial reporting
- one company in an affiliated group, it must be used by all companies in an affiliated group
- domestic companies, it must be used by foreign partners
6. The cost of goods available for sale is allocated between
- beginning inventory and ending inventory
- beginning inventory and cost of goods on hand
- ending inventory and cost of goods sold
- beginning inventory and cost of goods sold
7. For a typical manufacturing company, the most common critical point for recognizing revenue is the date:
- an order is received
- production is completed
- the product is delivered
- the payment is received