FAR — Financial Accounting & Reporting — Quiz 45

Questions in this quiz (10)

1. Which of the following transactions increases goods available for sale?

   • Purchase discounts
   • Inventory purchases
   • Sales returns to customers
   • Inventory write-downs

2. Which of the following reduces goods available for sale?

   • Inventory purchases
   • Freight-in
   • Purchase returns
   • Sales revenue

3. What is the primary purpose of a physical inventory count?

   • Record sales revenue
   • Determine actual inventory on hand
   • Calculate operating expenses
   • Determine gross profit

4. Which of the following may cause differences between book and physical inventory?

   • Inventory purchases
   • Freight-in costs
   • Recording errors or theft
   • Inventory costing methods

5. Which inventory method results in the highest ending inventory during rising prices?

   • FIFO
   • LIFO
   • Weighted-average
   • Specific identification

6. Which inventory method results in the lowest ending inventory during inflation?

   • FIFO
   • LIFO
   • Weighted-average
   • Specific identification

7. Which inventory method is used for unique, high-value items?

   • FIFO
   • LIFO
   • Weighted-average
   • Specific identification

8. Which cost is included in inventory valuation?

   • Freight-in
   • Advertising expenses
   • Administrative salaries
   • Office rent

9. Which ratio measures how long inventory remains unsold?

   • Current ratio
   • Inventory turnover ratio
   • Profit margin
   • Debt ratio

10. Which best describes obsolete inventory?

    • Inventory sold quickly
    • Inventory that is outdated or unusable
    • Inventory purchased on credit
    • Inventory stored in warehouse