Inventory Management Quiz

When merchandise is shipped FOB shipping point, the title transfers to the buyer when:

• The merchandise arrives at the buyer’s location

• The merchandise leaves the seller’s premises

• The buyer pays for the merchandise

• The buyer inspects the merchandise

Under FOB destination, who is responsible for the shipping costs?

• The buyer

• The seller

• The shipping company

• The insurance provider

Which of the following best defines consigned goods?

• Goods held for sale that are owned by the holder

• Goods held for sale by one party, but owned by another party

• Goods that have been shipped FOB destination

• Goods that are damaged or unsellable

The consignor is the party that:

• Holds goods for sale but doesn’t own them

• Owns the goods and entrusts them to another party for sale

• Pays for consignment insurance

• Manufactures the goods being sold

The consignee is the party that:

• Purchases consigned goods

• Owns consigned goods

• Holds consigned goods for sale but doesn’t own them

• Pays for freight on consigned goods

The specific identification method is most appropriate when:

• Inventory consists of bulk items like grains or liquids

• Inventory items are interchangeable

• Inventory consists of unique, high-value items

• Inventory is sold at a consistent price

Which of the following would most likely use the specific identification method?

• Grocery stores

• Jewelry stores

• Clothing retailers

• Hardware stores

The FIFO method assumes that:

• The most recent purchases are sold first

• The oldest purchases are sold first

• Inventory is tracked using barcodes

• All inventory is sold at the end of the period

Under the LIFO method, the cost of goods sold is calculated using the:

• Oldest inventory purchases

• Most recent inventory purchases

• Average inventory cost

• Cost of damaged goods

The weighted average method calculates the cost per unit by dividing:

• Total sales by total units

• Beginning inventory by total units

• Total cost of inventory by total units available for sale

• Cost of ending inventory by the number of units sold