QUESTION 6

1. For companies that use FIFO or average cost, inventory is valued at the lower of cost or net realizable value at the end of the reporting period.

   True

   False

2 points

QUESTION 7

1. Thompson TV and Appliance reported the following in its 2021 financial statements:

   	2021
   Sales	$ 420,000
   Cost of goods sold:
   Inventory, January 1	82,000
   Net purchases	340,000
   Goods available for sale	422,000
   Inventory, December 31	86,000
   Cost of goods sold	336,000
   Gross profit	$ 84,000

   Thompson's 2021 inventory turnover ratio is:

   	a.	3.91
   	b.	4.00
   	c.	4.88
   	d.	5.00

2 points

QUESTION 8

1. In applying LCM, market cannot be:

   	a.	Less than net realizable value.
   	b.	Greater than the normal profit.
   	c.	Less than the normal profit margin.
   	d.	Greater than net realizable value.

2 points

QUESTION 9

1. Inventory shipped f.o.b. destination is included the seller's inventory during transit.

   True

   False

2 points

QUESTION 10

1. In a perpetual inventory system, the cost of inventory sold is:

   	a.	Debited to accounts receivable.
   	b.	Credited to cost of goods sold.
   	c.	Debited to cost of goods sold.
   	d.	Not recorded at the time goods are sold.