1.
In a perpetual inventory system, the cost of inventory sold is
A. 
Credit to Cost of Goods Sold
B. 
Debited to Accounts Receivable
C. 
Debited to Cost of Goods Sold
D. 
2.
In a periodic inventory system, the cost of inventories sold is:
A. 
Not recorded at the time of sale
B. 
Debited to cost of goods sold
C. 
Debited to accounts receivable
D. 
Credited to cost of goods sold
3.
The inventory method that will always produce the same amount for the cost of goods sold in a periodic inventory system as in a perpetual inventory system would be:
A. 
B. 
C. 
D. 
4.
The use of LIFO in accounting for a firm's inventory:
A. 
Usually matches the physical flow of goods through the business
B. 
Is usually used for internal mgmt purposes
C. 
Usually provides a better match of expenses with revenues
D. 
5.
The primary reason for the popularity of LIFO is that it:
A. 
Simplifies record keeping
B. 
Saves income taxes currently
C. 
Provides better matching of physical flow and cost flow
D. 
Provides a permanent reduction of income taxes
6.
When reported in financial statements, a LIFO allowance account usually:
A. 
Indicates the effect on insome if LIFO were not used
B. 
Is shown in the firm's income statement
C. 
Is added to LIFO cost to indicate what the inventory would cost on a FIFO bases
D. 
Shows the current rate of inflation for tha asset
7.
If a company uses LIFO, a LIFO liquidation is problematic for a company's income taxes:
A. 
Whether inventory purchase costs are declining or rising
B. 
LIFO liquidations are not problematic for a company's income taxes
C. 
When inventory purchase costs are rising
D. 
When inventory purchase costs are declining
8.
Alison's dress shop buys dresses from McGuire Manufacturing. Alison purchased dresses from McGuire on July 17, and received an invoice with a list price amount of $6,200 and payment terms of 3/10, n/30. Alison uses the net method to record purchases. Alison should record the purchase at:
A. 
B. 
C. 
D. 
9.
Northwest Fur Co. started 2009 with $97,000 of merchandise inventory on hand. During 2009, $440,000 in merchandise was purchased on account with credit terms of 1/15, n/45. All discounts were taken. Purchases were all made f.o.b. shipping point. Northwest paid freight charges of $9,500. Merchandise with an invoice amount of $3,000 was returned for credit. Cost of goods sold for the year was $376,000. Northwest uses a perpetual inventory system.
What is ending inventory assuming Northwest uses the gross method to record purchases?
A. 
B. 
C. 
D. 
10.
Fulbright Corp. uses the periodic inventory system. During its first year of operations, Fulbright made the following purchases (listed in chronological order of acquisition):
• 45 units at $106
• 75 units at $72
• 175 units at $51
Sales for the year totaled 273 units, leaving 22 units on hand at the end of the year.
Ending inventory using the average cost method is
A. 
B. 
C. 
D. 
11.
Fulbright Corp. uses the periodic inventory system. During its first year of operations, Fulbright made the following purchases (listed in chronological order of acquisition):
• 40 units at $90
• 70 units at $83
• 171 units at $60
Sales for the year totaled 272 units, leaving 9 units on hand at the end of the year.
Ending inventory using the FIFO method is:
A. 
B. 
C. 
D. 
12.
Fulbright Corp. uses the periodic inventory system. During its first year of operations, Fulbright made the following purchases (listed in chronological order of acquisition):
• 40 units at $110
• 72 units at $78
• 170 units at $56
Sales for the year totaled 271 units, leaving 11 units on hand at the end of the year.
Ending inventory using the LIFO method is
A. 
B. 
C. 
D. 
13.
Nu Company reported the following pretax data for its first year of operations.
Net sales
2,810
Cost of goods available for sale
2,370
Operating expenses
800
Effective tax rate
30%
Ending inventories:
If LIFO is elected
930
If FIFO is elected
1,160
What is Nu's net income if it elects FIFO?
A. 
B. 
C. 
D. 
14.
Nu Company reported the following pretax data for its first year of operations.
Net sales
2,820
Cost of goods available for sale
2,490
Operating expenses
740
Effective tax rate
30%
Ending inventories:
If LIFO is elected
820
If FIFO is elected
1,080
A. 
B. 
C. 
D. 
15.
Nu Company reported the following pretax data for its first year of operations.
Net sales
2,990
Cost of goods available for sale
2,330
Operating expenses
860
Effective tax rate
40%
Ending inventories:
If LIFO is elected
950
If FIFO is elected
1,160
What is Nu's gross profit ratio if it elects LIFO? (Round your answer to the nearest whole percentage.)
A. 
B. 
C. 
D. 
16.
Nueva Company reported the following pretax data for its first year of operations.
Net sales
7,380
Cost of goods available for sale
5,690
Operating expenses
1,708
Effective tax rate
40%
Ending inventories:
If LIFO is elected
618
If FIFO is elected
812
What is Nueva's gross profit ratio if it elects FIFO? (Round your answer to two decimal places e.g., .1234 as 12.34%.)
A. 
B. 
C. 
D. 
17.
Thompson TV and Appliance reported the following in its 2009 financial statements:
2009
Sales
$424,000
Cost of goods sold:
Inventory, January 1
62,000
Net purchases
330,000
Goods available for sale
392,000
Inventory, December 31
102,000
Cost of goods sold
290,000
Gross profit
$134,000
Thompson's 2009 gross profit ratio is
A. 
B. 
C. 
D. 
18.
Thompson TV and Appliance reported the following in its 2009 financial statements:
2009
Sales
$436,000
Cost of goods sold:
Inventory, January 1
75,000
Net purchases
329,000
Goods available for sale
404,000
Inventory, December 31
86,000
Cost of goods sold
318,000
Gross profit
$118,000
Thompson's 2009 inventory turnover ratio is
A. 
B. 
C. 
D. 
19.
Anthony Thomas Candies (ATC) reported the following financial data for 2009 and 2008:
The average days inventory for ATC for 2009 is:
A. 
B. 
C. 
D. 
20.
Bond Company adopted the dollar-value LIFO inventory method on January 1, 2009. In applying the LIFO method, Bond uses internal cost indexes and the multiple-pools approach. The following data were available for Inventory Pool No. 3 for the two years following the adoption of LIFO:
Ending Inventory
At Current
At Base
Year
Cost
Year Cost
Cost index
1/1/09
$303,500
$303,500
1
12/31/09
351,540
325,500
1.08
12/31/10
420,000
350,000
1.2
Under the dollar-value LIFO method the inventory at December 31, 2010, should be
A. 
B. 
C. 
D.