Practice Test GeeksAFC - Accounting Fundamentals Certification Practice Test
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AFC Inventory Management Flashcards

6 cards from real AFC practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

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  1. A consignor ships goods to a consignee. Who should include these goods in their inventory?

    Answer: The consignor, because they retain ownership

    Consigned goods remain the property of the consignor until sold; the consignee never takes title to the goods.

  2. Which of the following best describes 'net realizable value' of inventory?

    Answer: Expected selling price minus estimated costs to complete and sell

    NRV is the estimated selling price in the ordinary course of business minus any costs necessary to make the sale.

  3. A company using LIFO reports inventory of $80,000. Its LIFO reserve is $15,000. What would the inventory balance be under FIFO?

    Answer: $95,000

    FIFO inventory = LIFO inventory + LIFO reserve = $80,000 + $15,000 = $95,000, reflecting the current (higher) cost of inventory.

  4. Days' inventory outstanding (DIO) is calculated as:

    Answer: Inventory ÷ COGS × 365

    DIO = (Ending Inventory ÷ COGS) × 365, representing the average number of days it takes to sell inventory.

  5. Which of the following would increase the risk of inventory obsolescence?

    Answer: Short product life cycles

    Short product life cycles mean inventory can become outdated quickly, increasing the likelihood it cannot be sold at full price.

  6. Under the periodic inventory system, a physical count is typically performed:

    Answer: At the end of an accounting period

    In a periodic system, inventory on hand is determined by a physical count at the end of the period, which is used to calculate COGS.