1.
Prior to the computer age, virtually all companies:
A. 
All of these answers are correct.
B. 
Kept detailed inventory records manually
C. 
Used the periodic inventory system
D. 
Used the perpetual inventory system
2.
The type of firm that will have an Inventory account in
its general ledger is a:
A. 
B. 
C. 
D. 
Merchandising, manufacturing, or hybrid firm
3.
Superstar Sports Supplies has purchased 1,800
basketballs this period. During the period it sold 2,000 basketballs. A
physical count at the end of the month reveals that Superstar has 500
basketballs still on hand. How many basketballs did Superstar have at the beginning
of the current month?
A. 
B. 
C. 
D. 
4.
An inventory system where the inventory calculation and
cost of goods sold are determined only at the end of the period for the income
statement is:
A. 
B. 
C. 
D. 
5.
The physical flow of merchandise where a company rotates
its stock by selling the oldest merchandise before newer merchandise is called:
A. 
B. 
C. 
An averaging of inventory
D. 
6.
Which statement regarding freight costs below is
correct?
A. 
Freight paid to ship merchandise in is considered part of the cost of goods sold.
B. 
Freight paid to ship merchandise out to customers is considered part of selling expense.
C. 
Freight paid to ship merchandise in is considered part of selling expense.
D. 
Answers a and b are both correct.
7.
A. 
B. 
C. 
D. 
8.
The average inventory holding period in days is computed
by:
A. 
Cost of goods sold divided by average inventory
B. 
Net income divided by average inventory
C. 
365 divided by (the cost of goods sold divided by average inventory)
D. 
Average inventory divided by total assets
9.
Superstar Sports Supplies has started the period with
600 baseballs. During the period it purchased 2,000 additional baseballs. A
physical count at the end of the month reveals that Superstar has 500 baseballs
still on hand. How many baseballs did Superstar sell during the current month?
A. 
B. 
C. 
D. 
10.
A company purchases a computer for use in its own
business. The computer should be considered:
A. 
B. 
C. 
D. 
11.
The stock of items a company holds for resale to other
companies or the general public is called:
A. 
B. 
C. 
D. 
12.
When prices are increasing, using FIFO results in:
A. 
B. 
C. 
D. 
Higher retail prices to customers
13.
A buyer that regularly takes advantage of 2/10, n/30
payment terms will earn on an annual return of:
A. 
B. 
C. 
D. 
14.
During a time of rising prices, more of the total cost
of inventory is shown on the income statement as an expense when a company uses
the:
A. 
B. 
C. 
D. 
None of these answers is correct.
15.
Under the perpetual inventory system, the inventory
amounts shown on accounting records in units and dollars are called:
A. 
B. 
C. 
D. 
16.
Ending inventory is computed by:
A. 
Beginning inventory plus purchases
B. 
Ending inventory plus purchases
C. 
Beginning inventory plus ending inventory
D. 
Goods available for sale less cost of goods sold
17.
Cost of goods available is equal to:
A. 
Ending Inventory + Purchases
B. 
Beginning inventory + Cost of goods sold
C. 
Purchases + Cost of goods sold
D. 
Cost of goods sold + Ending inventory
18.
A company purchases a computer for resale. The computer
should be considered:
A. 
B. 
C. 
D. 
19.
With regard to the statement of cash flows, payments for
the purchase of inventory should be considered a(n):
A. 
B. 
C. 
D. 
None of these answers is correct.
20.
Ending inventory is part of which accounting element?
A. 
B. 
C. 
D. 
21.
Superstar Sports Supplies has started the period with
800 soccer balls. During the period it sold 2,000 soccer balls. A physical
count at the end of the month reveals that Superstar has 600 soccer balls still
on hand. How many soccer balls did Superstar purchase during the current
month?
A. 
B. 
C. 
D. 
22.
A. 
B. 
C. 
D. 
23.
The cost flow method that is typically used by companies
that sell airplanes, antiques, or boats is known as the:
A. 
B. 
C. 
Specific identification method
D. 
24.
A high inventory turnover rate:
A. 
Indicates the company may have problems with theft, damage, or spoilage of its inventory
B. 
C. 
Indicates the wrong merchandise is being purchased for resale
D. 
Is good for the company as long as customer satisfaction is not compromised
25.
A liquid propane (LP) gas distributor keeps its supply
of LP gas in large 10,000-gallon tanks. When it receives a new shipment of LP
gas, it mixes the new product together with the existing product in the tanks.
This situation illustrates the physical flow of merchandise known as:
A. 
B. 
C. 
D. 
An averaging of inventory amounts