1. The cost of inventory under
a perpetual system does not include which of the following?
a. Inventory price b. Freight charges
c. Sales commissions
d. Sales taxes on inventory purchase
2. The Cost of Goods Sold account represents the cost of inventory:
a. remaining in a company's inventory account at year end and classified as ending inventory.
b. purchased during the year plus inventory sold.
c. sold during the year.
d. available for sale at the beginning of the year.
3. When inventory is bought under a perpetual inventory system, what happens to the Inventory and Cost of Goods Sold accounts, respectively?
a. No change, Increase
b. Increase, No change
c. Increase, Increase
d. Decrease, No change
4. When an inventory item is sold under a perpetual inventory system:
a. the Inventory account is not affected.
b. inventory is decreased and Cost of Goods Sold is increased.
c. inventory is increased and Cost of Goods Sold is increased.
d. neither Inventory nor Cost of Goods Sold is affected until the end of the current period.
5. A company purchases a unit of inventory for $1.50 and then later purchases a second for $2.00. The company then sells one unit for $4.50. After the sale, the company purchases an additional unit for $2.50. The company uses a perpetual inventory system. Given these facts, which of the following is true?
a. Cost of Goods Sold under FIFO is $1.50
b. ending inventory under LIFO is $4.00
c. Cost of Goods Sold under Moving Average is $1.75
d. All of the above are true
6. A company purchases a unit of inventory for $1.50, another for $2.00 and then a third for $2.50. The company then sells one unit for $4.50. The company uses a perpetual inventory system. Given these facts, which of the following is true?
a. ending inventory under FIFO is $1.50
b. Cost of Goods Sold under LIFO is $2.50
c. Cost of Goods Sold under Moving Average is $4.50
d. ending inventory under LIFO is $4.50
7. Which of the following inventory costing methods is not based on an assumption about the cost of inventory sold?
a. FIFO
b. LIFO
c. Specific Identification
d. Moving Average
8. In a period of rising prices, under which inventory valuation method would ending inventory have the highest assigned value?
a. FIFO
b. LIFO
c. Moving average
d. All methods will result in the same value