Under the _____ inventory method, accounting records maintain a continuously updated inventory value

Under the _____ inventory method, accounting records maintain a continuously updated inventory value.

	a.	periodic
	b.	retail
	c.	physical
	d.	perpetual

Answer = d

Addison, Inc. uses a perpetual inventory system.  The following is information about one inventory item for the month of September:

Sep.  1	Inventory	20 units at $20
4	Sold	10 units
10	Purchased	30 units at $25
17	Sold	20 units
30	Purchased	10 units at $30

If Addison uses LIFO, the cost of the ending merchandise inventory on September 30 is

	a.	$800
	b.	$750
	c.	$700
	d.	$650

Answer = b

Which of the following is not an example for safeguarding inventory?

	a.	Physical devices such as two-way mirrors, cameras, and alarms.
	b.	Storing inventory in restricted areas.
	c.	Returning inventory that is defective or broken.
	d.	Matching receiving documents, purchase orders, and vendor’s invoice.

Answer = c

Determine the total value of the merchandise using net realizable value.

Item			Quantity	Selling Price	Commission
Doll			10	$7	$2
Horse			5	9	3
		a.	$35
		b.	$80
		c.	$25
		d.	$115

Answer = b

The method of estimating inventory that uses records of the selling prices of the merchandise is called

	a.	gross profit method
	b.	average cost method
	c.	retail method
	d.	inventory turnover method

Answer = c

Damaged merchandise that can be sold only at prices below cost should be valued at

Damaged merchandise that can be sold only at prices below cost should be valued at

	a.	LIFO
	b.	average cost
	c.	net realizable value
	d.	FIFO

Answer = c

Garrison Company uses the retail method of inventory costing.  It started the year with an inventory that had a retail cost of $45,000.  During the year, Garrison purchased an inventory with a retail sales value of $300,000.  After performing a physical inventory, Garrison calculated the inventory at retail to be $80,000.  The mark up is 100% of cost.  Determine the ending inventory at its estimated cost.

	a.	$160,000
	b.	$80,000
	c.	$40,000
	d.	$45,000

Answer = c

The primary objectives of control over inventory are

	a.	safeguarding inventory from damage and reporting inventory in the financial statements
	b.	maintaining constant observation of the inventory and reporting inventory in the financial statements
	c.	safeguarding the inventory from damage and maintaining constant observation of the inventory
	d.	reporting inventory in the financial statements

Answer = a

For the year ended December 31, Depot Max’s cost of merchandise sold was $56,900.  Inventory at the beginning of the year was $6,540.  Ending inventory was $7,250.  Compute Depot Max’s inventory turnover for the year.

	a.	44.0
	b.	7.8
	c.	8.3
	d.	8.7

Answer = c

Control of inventory should begin as soon as the inventory is received.  Which of the following internal control steps is not done to meet this goal?

	a.	check the invoice extensions and totals
	b.	check the invoice with the person who specifically purchased the item
	c.	check the invoice to the receiving report
	d.	check the invoice to the purchase order

Answer = b