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In a perpetual inventory system, the cost of purchases is debited to:
A) Purchases.
B) Cost of goods sold.
C) Inventory.
D) Accounts payable.
2. In a periodic inventory system, the cost of purchases is debited to:
A) Purchases.
B) Cost of goods sold.
C) Inventory.
D) Accounts payable.
3. In a perpetual inventory system, the cost of inventory sold is:
A) Debited to accounts receivable.
B) Credited to cost of goods sold.
C) Debited to cost of goods sold.
D) Not recorded at the time.
4. In a periodic inventory system, the cost of inventories sold is:
A) Debited to accounts receivable.
B) Credited to cost of goods sold.
C) Debited to cost of goods sold.
D) Not recorded at the time of sale.
5. The Mateo Corporation's inventory at December 31, 2011, was $325,000 based on a physical count priced at cost, and before any necessary adjustment for the following:
▪ Merchandise costing $30,000, shipped F.o.b. shipping point from a vendor on December 30, 2011, was received on January 5, 2012.
▪ Merchandise costing $22,000, shipped F.o.b. destination from a vendor on December 28, 2011, was received on January 3, 2012.
▪ Merchandise costing $38,000 was shipped to a customer F.o.b. destination on December 28, arrived at the customer's location on January 6, 2012.
▪ Merchandise costing $12,000 was being held on consignment by Traynor Company.
What amount should Mateo Corporation report as inventory in its December 31, 2011, balance sheet?
A) $367,000.
B) $427,000.
C) $405,000.
D) $325,000.
6. Ending inventory is equal to the cost of items on hand plus:
A) Items in transit sold f.o.b. shipping point.
B) Purchases in transit f.o.b. destination.
C) Items in transit sold f.o.b. destination.
D) None of the above.
7. Purchases equal the invoice amount:
A) Plus freight-in, plus discounts lost.
B) Less purchase returns, plus purchase allowances.
C) Plus freight-in, less purchase discounts.
D) Plus discounts, less purchase returns.
8. Under the net method, purchase discounts lost are:
A) Included in purchases.
B) Added to accounts payable.
C) Included in interest expense.
D) Deducted from discount income.
9. 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 $6,000 and payment terms of 2/10, n/30. Alison uses the net method to record purchases. Alison should record the purchase at:
A) $5,940.
B) $5,880.
C) $6,000.
D) $6,120.
10. Cinnamon Buns Co. (CBC) started 2011 with $52,000 of merchandise on hand. During 2011, $280,000 in merchandise was purchased on account with credit terms of 2/10 n/30. All discounts were taken. Purchases were all made f.o.b. shipping point. CBC paid freight charges of $9,000. Merchandise with an invoice amount of $4,000 was returned for credit. Cost of goods sold for the year was $316,000. CBC uses a perpetual inventory system.

Assuming CBC uses the gross method to record purchases, ending inventory would be:
A) $6,480.
B) $15,400.
C) $15,480.
D) $21,000.
11. Cost of goods sold is given by:
A) Beginning inventory - net purchases + ending inventory.
B) Beginning inventory + accounts payable - net purchases.
C) Net purchases + ending inventory - beginning inventory.
D) Net Purchases + beginning inventory - ending inventory.
12. In a period when costs are rising and inventory quantities are stable, the inventory method that would result in the highest ending inventory is:
A) Weighted average.
B) Moving average.
C) FIFO.
D) LIFO.
13. 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 $100
• 70 units at $80
• 170 units at $60
Sales for the year totaled 270 units, leaving 10 units on hand at the end of the year.

Ending inventory using the average cost method (rounded) is:
A) $650.
B) $1,000.
C) $707.
D) $600.
14. 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 $100
• 70 units at $80
• 170 units at $60
Sales for the year totaled 270 units, leaving 10 units on hand at the end of the year.

Ending inventory using the FIFO method is:
A) $650.
B) $1,000.
C) $707.
D) $600.
15. 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 $100
• 70 units at $80
• 170 units at $60
Sales for the year totaled 270 units, leaving 10 units on hand at the end of the year.

Ending inventory using the LIFO method is:
A) $650.
B) $1,000.
C) $707.
D) $600.
16. Inventory records for Herb's Chemicals revealed the following:
March 1, 2011, inventory: 1,000 gallons @ $7.20 = $7,200


Ending inventory assuming LIFO in a perpetual inventory system would be:
A) $4,960.
B) $5,060.
C) $5,080.
D) $5,140.
17. Inventory records for Herb's Chemicals revealed the following:
March 1, 2011, inventory: 1,000 gallons @ $7.20 = $7,200


The ending inventory assuming FIFO is:
A) $5,140.
B) $5,080.
C) $5,060.
D) $5,050.
18. Thompson TV and Appliance reported the following in its 2011 financial statements:


Thompson's 2011 gross profit ratio is:
A) 25%.
B) 19%.
C) 20%.
D) None of the above is correct.
19. Thompson TV and Appliance reported the following in its 2011 financial statements:


Thompson's 2011 inventory turnover ratio is:
A) 3.91.
B) 4.00.
C) 4.88.
D) 5.00.
20. Bond Company adopted the dollar-value LIFO inventory method on January 1, 2011. 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:

Under the dollar-value LIFO method the inventory at December 31, 2012, should be
A) $357,600.
B) $350,000.
C) $351,600.
D) None of the above.