FAR — Financial Accounting & Reporting — Quiz 47

Questions in this quiz (10)

1. Which of the following would increase ending inventory under the periodic system?

   • Purchase returns
   • Purchase discounts
   • Freight-in costs
   • Sales discounts

2. Which of the following reduces net purchases?

   • Freight-in
   • Purchase returns and discounts
   • Inventory purchases
   • Cost of goods sold

3. Which formula calculates net purchases?

   • Purchases – Returns – Discounts + Freight-in
   • Purchases + Returns – Freight-in
   • Purchases – Freight-in
   • Purchases + Freight-in

4. Which best describes goods available for sale?

   • Beginning inventory plus purchases
   • Ending inventory plus purchases
   • Total revenue minus expenses
   • Cost of goods sold plus inventory

5. Which inventory method reduces price volatility by averaging costs?

   • FIFO
   • LIFO
   • Weighted-average
   • Specific identification

6. Which inventory method is best for custom-built or unique products?

   • FIFO
   • LIFO
   • Weighted-average
   • Specific identification

7. Which ratio measures how often inventory is sold?

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

8. Which formula calculates average inventory?

   • (Beginning Inventory + Ending Inventory) ÷ 2
   • Beginning Inventory + Purchases
   • Ending Inventory – Purchases
   • Cost of Goods Sold ÷ Inventory

9. Why do companies analyze inventory turnover?

   • Calculate employee salaries
   • Evaluate inventory efficiency
   • Determine depreciation expense
   • Calculate revenue

10. Which situation would likely reduce inventory turnover?

    • Faster sales
    • Excess inventory remaining unsold
    • Increased demand
    • Reduced inventory levels