Acct 1101 Ch 5 Quiz

Which is not an inventory cost flow method allowed by GAAP?

• FIFO
• LIFO
• Cash
• Weighted Average

What does FIFO stand for?

• Fast in, fast out
• First in, first out
• First income, first out

Beginning inventory + Inventory purchases = ??

• Cost of good sold
• Cost of goods available for sale
• Ending inventory
• Total units sold

Which cost flow method uses the oldest inventory cost as cost of goods sold when a product is sold?

• FIFO
• LIFO
• Cash
• Weighted Average

Which of the following cost flow methods would provide the lowest amount of net income (assuming normal inflation)?

• FIFO
• LIFO
• Cash
• Weighted Average

Inventory that is not sold at the end of the year appears where on the financial statements?

• Cost of goods sold on income statement
• Cost of goods sold on balance sheet
• Ending merchandise inventory on balance sheet
• Ending merchandise inventory on income statement

Net sales - cost of good sold = ?

• Revenue
• Net income
• Cost of goods available for sale
• Gross margin

When applying the lower of cost or market rule to inventory, "market" represents what?

• Replacement cost of inventory
• Selling price of inventory
• Original cost of inventory
• The total of all three

The adjusting entry to recognize the write down of inventory based on the lower-of-cost-or-market rule will

• Increase liabilities
• Decrease liabilities
• Increase assets
• Decrease assets

The inventory turnover ratio measures what?

• How many days, on average, it takes to sell a company's inventory.
• How quickly a company sells its inventory.
• The profit made from selling inventory.
• The risk associated with selling inventory.