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Multiple Choice Quiz
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1
In a perpetual inventory system, if merchandise is returned to a supplier:
A)Purchase returns is credited.
B)Inventory is credited.
C)Purchase discounts is credited.
D)Inventory is debited.
2
The Hamlet Company uses the periodic inventory system. Information for 2016 is as follows:

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Hamlet's cost of goods sold for 2016 is:
A)$1,522,000
B)$1,188,000
C)$1,140,000
D)$1,128,000
3
Symington Corporation uses the periodic inventory system. At December 31, 2016, the end of the company's fiscal year, a physical count of inventory revealed an ending inventory balance of $320,000. The following items were not included in the physical count:

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Symington's 2016 ending inventory should be:
A)$320,000
B)$379,000
C)$355,000
D)$332,000
4
By the gross method of accounting for purchase discounts, a discount not taken is recorded as:
A)Purchases.
B)Interest expense.
C)A reduction in sales revenue.
D)All of these answer choices are incorrect.
5
By the net method of accounting for purchase discounts, a discount not taken is recorded as:
A)Purchases.
B)Interest expense.
C)A reduction in sales revenue.
D)All of these answer choices are incorrect.
6
Identify the statement below concerning the LIFO inventory method that is untrue.
A)In the absence of changes in costs, the results of using LIFO would be identical to those obtained by FIFO.
B)LIFO will provide a close matching of current revenues with current costs since the most recent costs are expensed first.
C)The ending inventory under LIFO will tend to approximate replacement cost.
D)In periods of declining costs, cost of goods sold using LIFO will produce a lower cost of goods sold than FIFO.
7
Sanfillipo, Inc., had 800 units of inventory on hand at March 1, 2016, costing $20 each. Purchases and sales of inventory during the month of March were as follows:

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Sanfillipo uses the periodic inventory system. According to a physical count, 600 units were on hand at the end of March.
The cost of inventory at the end of March applying the FIFO method is:
A)$12,900
B)$14,400
C)$12,000
D)$14,000
8
Sanfillipo, Inc., had 800 units of inventory on hand at March 1, 2016, costing $20 each. Purchases and sales of inventory during the month of March were as follows:

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Sanfillipo uses the periodic inventory system. According to a physical count, 600 units were on hand at the end of March.
The cost of inventory at the end of March applying the LIFO method is:
A)$12,900
B)$14,400
C)$12,000
D)$14,000
9
Sanfillipo, Inc., had 800 units of inventory on hand at March 1, 2016, costing $20 each. Purchases and sales of inventory during the month of March were as follows:

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Sanfillipo uses the periodic inventory system. According to a physical count, 600 units were on hand at the end of March.
The cost of inventory at the end of March applying the average cost method is:
A)$12,900
B)$14,400
C)$12,000
D)$14,000
10
Sanfillipo, Inc., had 800 units of inventory on hand at March 1, 2016, costing $20 each. Purchases and sales of inventory during the month of March were as follows:

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Sanfillipo uses the periodic inventory system. According to a physical count, 600 units were on hand at the end of March.
If Sanfillipo instead used the perpetual inventory system, cost of goods sold for the month of March applying the LIFO inventory method would be:
A)$22,400
B)$21,500
C)$21,600
D)$24,000
11
In a period of declining costs, the use of which of the following inventory cost methods would result in the highest ending inventory?
A)FIFO.
B)LIFO.
C)Average cost.
D)Weighted-average cost.
12
International Financial Reporting Standards allow companies to use each of the following inventory valuation methods except:
A)FIFO.
B)LIFO.
C)Average cost.
D)All of these methods are allowed.
13
LIFO liquidation profits occur when:
A)Costs are rising and inventory quantity increases.
B)Costs decline.
C)Costs increase.
D)Costs are rising and inventory quantity declines.
14
For its 2016 fiscal year, the King Pharmaceutical Company reported sales of $10,500,000, cost of goods sold of $6,300,000, and net income of $525,000. The company's gross profit ratio for the year is:
A)40%
B)60%
C)5%
D)67%
15
On December 31, 2016, the Charlie Company adopted the dollar-value LIFO inventory method. Inventory at the end of 2016 for its only inventory pool was $500,000 under the dollar-value LIFO method. At the end of 2017 inventory at year-end cost is $672,000 and the cost index is 1.05. Inventory at the end of 2017 at dollar-value LIFO cost is:
A)$625,000
B)$640,000
C)$647,000
D)$672,000
16
J.T. Rider and Sons uses the dollar-value LIFO inventory method. At the end of 2017 the cost index is 1.25 and the ending inventory at base year cost is $360,000. If 2017 beginning inventory at base year cost was $300,000, 2017 ending inventory at dollar-value LIFO cost is:
A)$300,000
B)$450,000
C)$360,000
D)$375,000





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