Chapter 18 - Inventory-My

When we bought inventory, we paid $6 each. The current replacement cost is $7 each. How do we value the items on the balance sheet?

• $6/each

• $6.50/each

• $7/each

If inventory costs are rising, what's a benefit of using FIFO?

• Higher net income

• Lower income taxes

• Lower ending inventory

• Quickbooks lets us

Gross Profit =

• Sales – Cost of Goods Sold

• Sales + Cost of Goods Sold

• Sales X Cost of Goods Sold

We had two items costing $20 each. We buy two more at $25 each. We use LIFO and sell one. How much is cost of goods sold?

• $20

• $22.50

• $25

• $20 or $25, depending on which item the customer picks up

We had two items costing $20 each. We buy two more at $25 each. We use FIFO and sell one. How much is cost of goods sold?

• $20

• $22.50

• $25

• $20 or $25, depending on which item the customer picks up

Which inventory costing method requires calculation of a new average cost after each purchase?

• Specific cost

• FIFO

• LIFO

• Weighted average

For which type of business is a Perpetual Inventory System most suitable?

• Small businesses

• Big businesses needing real-time info

• Businesses with no inventory

• Seasonal businesses

We had two items costing $20 each. We buy two more at $25 each. We use specific identification and sell one. How much is cost of goods sold?

• $20

• $22.50

• $25

• $20 or $25, depending on which item the customer picks up

Sarah, the owner of Sarah's boutique, determined the number of jeans and dresses on hand to sell to her customers.  What is this called?

• Raw Materials

• Work in Process

• Accounts Receivable

• Inventory

Inventories are classified as _____________

• long term liabilities

• current asset

• Fixed asset

• Capital