CB CB Inventory and Fixed Assets

Question 1

Under the FIFO inventory method, the first units purchased are assumed to be:

Accepted Answer

The first units sold

Answer

The last units sold

Answer

The most expensive units sold

Answer

Held in ending inventory

Question 2

During a period of rising prices, LIFO results in a higher cost of goods sold compared to FIFO because:

Accepted Answer

It assigns the most recent, higher costs to inventory sold

Answer

It assigns the oldest, cheapest costs to inventory sold

Answer

It ignores purchase price fluctuations

Answer

It averages all costs equally

Question 3

A physical inventory count revealed 50 fewer units than the perpetual inventory records showed. The bookkeeper should:

Accepted Answer

Debit Inventory Over and Short and credit Inventory

Answer

Ignore the discrepancy if it is small

Answer

Debit Inventory and credit Cost of Goods Sold

Answer

Debit Cash and credit Inventory

Question 4

Goods held on consignment by a retailer are included in whose inventory?

Accepted Answer

The consignor's (owner's) inventory

Answer

The retailer's inventory

Answer

Both parties' inventories equally

Answer

Neither party's inventory

Question 5

Which inventory valuation method results in an ending inventory value closest to current replacement cost?

Accepted Answer

FIFO

Answer

LIFO

Answer

Weighted-average

Answer

Specific identification

Question 6

The lower-of-cost-or-net-realizable-value (LCNRV) rule requires writing inventory down when:

Accepted Answer

Net realizable value falls below cost

Answer

Market price rises above cost

Answer

Units on hand increase beyond forecast

Answer

The FIFO method is used