1. Under which method is taking a physical inventory necessary?

a.Periodic and perpetual inventory systems

b.Periodic inventory system

c.Perpetual inventory system

d.Not necessary under either the periodic inventory system or perpetual inventory system

2. Which of the following inventory methods often follows the actual movement of goods?

a.FIFO

b.Weighted-average

c.Specific identification

d.LIFO

3. If ending inventory is understated in the current fiscal year, what effect will this have on net income for the next fiscal year?

a.Net income would be overstated.

b.Net income would be understated.

c.There would be no effect on net income.

d.Net income would only be affected in the current fiscal year, and it would be overstated.

4.

The following information is provided by Lane Company:

	Cost	Retail
Inventory, start of the period	$ 65,000	$ 85,000
Net purchases during the period	215,000	315,000
Net sales for the period		295,000

Using the retail inventory method, what is the estimated inventory at the end of the period?

a.$73,500

b.$120,000

c.$75,000

d.$105,000

5.

Remote Company had the following information pertaining to inventory:

		Units	Unit Price	Total Cost
January 1	Beginning inventory	300	$2.40	$720
April 10	1st purchase	200	2.45	490
July 15	2nd purchase	200	2.50	500
December 1	3rd purchase	100	2.90	290
		800		$2,000

At the end of the period, the company took a physical inventory and determined that there are 190 units on hand. What amount should be assigned to the ending inventory under the weighted-average periodic inventory method?

a.$475

b.$456

c.$486

d.$551

6. Under the periodic inventory method, which of the following accounts is credited when the company returns merchandise to the supplier?

a.Purchases Returns and Allowances

b.Sales Returns and Allowances

c.Merchandise Inventory

d.Purchases Discounts