Chapter 1 Inventory Quiz

What are the three types of inventory in a manufacturing company?

• Raw Materials, Work-in-Progress, Finished Goods

• Merchandise, Supplies, Equipment

• Raw Materials, Merchandise, Supplies

• Finished Goods, Prepaid Expenses, Cash

Which inventory system updates inventory records continuously?

• Periodic

• Perpetual

• FIFO

• LIFO

What does FOB stand for in shipping terms?

• Freight On Board

• Free On Board

• Freight Of Buyer

• Free Of Balance

Which inventory costing method is not allowed under IFRS?

• FIFO

• LIFO

• Weighted Average

• Specific Identification

What is the formula for Gross Profit?

• Sales - Operating Expenses

• Sales - Cost of Goods Sold

• Revenue - Taxes

• Revenue - Inventory

Which account is credited when inventory is sold under perpetual system?

• Sales Revenue

• Inventory

• Cost of Goods Sold

• Accounts Payable

Which of the following is not included in inventory cost under IAS 2?

• Import duties

• Transport

• Advertising

• Handling

What is the effect of overstating ending inventory?

• Understated gross profit

• Overstated cost of goods sold

• Overstated gross profit

• No effect

Under FOB Shipping Point, who pays for shipping?

• Seller

• Buyer

• Freight Company

• Government

What does FIFO stand for?

• First-in, first-over

• First-in, first-out

• Final-in, final-out

• Frequent inventory final-out