Under a periodic inventory system

1. Under a periodic inventory system

	a.	a physical inventory is taken at the end of the period
	b.	merchandise inventory is debited when goods are returned to vendors
	c.	accounting records continuously disclose the amount of inventory
	d.	a separate account for each type of merchandise is maintained in a subsidiary ledger

Answer = a

1. The inventory costing method that reports the most current prices in ending inventory is

	a.	LIFO
	b.	average cost
	c.	specific identification
	d.	FIFO

Answer = d

1. FIFO reports higher gross profit and net income than the LIFO method when

	a.	prices are reduced by 50%
	b.	prices are decreasing
	c.	prices are increasing
	d.	prices remain stable

Answer = c

1. If merchandise inventory is being valued at cost and the purchase price is steadily falling, which method of costing will yield the largest net income?

	a.	FIFO
	b.	average cost
	c.	LIFO
	d.	weighted average

Answer = c