Question 1

One of the two internal control procedures over inventory is to properly report inventory on the financial statements.

Accepted Answer

True

Question 2

FIFO is the inventory costing method that follows the physical flow of the goods.

Accepted Answer

True

Question 3

A purchase order establishes an initial record of the receipt of the inventory.

Accepted Answer

False

Question 4

A perpetual inventory system is an effective means of control over inventory.

Accepted Answer

The answer of A perpetual inventory system is an effective...

Question 5

Under the periodic inventory system, the merchandise inventory account continuously discloses the amount of inventory on hand.

Accepted Answer

The answer of Under the periodic inventory system, the merchandise...

Question 6

The three inventory costing methods will normally each yield different amounts of net income.

Accepted Answer

The answer of The three inventory costing methods will normally...

Question 7

When using the FIFO inventory costing method, the most recent costs are assigned to the cost of merchandise sold.

Accepted Answer

The answer of When using the FIFO inventory costing method,...

Question 8

The weighted average inventory cost flow method is the least used of the inventory costing methods.

Accepted Answer

The answer of The weighted average inventory cost flow method...

Question 9

Under the periodic inventory system, a physical inventory is taken to determine the cost of the inventory on hand and the cost of the merchandise sold.

Accepted Answer

The answer of Under the periodic inventory system, a physical...

Question 10

If the perpetual inventory system is used, the merchandise inventory account is debited for purchases of merchandise.

Accepted Answer

The answer of If the perpetual inventory system is used,...

Question 11

The specific identification inventory method should be used when the inventory consists of identical, low-cost units that are purchased and sold frequently.

Accepted Answer

The answer of The specific identification inventory method should be...

Question 12

The choice of an inventory costing method has no significant impact on the financial statements.

Accepted Answer

The answer of The choice of an inventory costing method...

Question 13

Under the LIFO inventory costing method, the most recent costs are assigned to ending inventory.

Accepted Answer

The answer of Under the LIFO inventory costing method, the...

Question 14

During periods of increasing costs, the use of the FIFO method of costing inventory will result in a greater amount of net income than would result from the use of the LIFO cost method.

Accepted Answer

The answer of During periods of increasing costs, the use...

Question 15

The average cost method will always yield results between FIFO and LIFO.

Accepted Answer

The answer of The average cost method will always yield...

Question 16

Safeguarding inventory and proper reporting of the inventory in the financial statements are the reasons for controlling the inventory.

Accepted Answer

The answer of Safeguarding inventory and proper reporting of the...

Question 17

Inventory controls start when the merchandise is shelved in the store area.

Accepted Answer

The answer of Inventory controls start when the merchandise is...

Question 18

Of the three widely used inventory costing methods 
(FIFO, LIFO, and average cost), the LIFO method of costing inventory assumes costs are charged based on the most recent purchases first.

Accepted Answer

The answer of Of the three widely used inventory costing...

Question 19

A subsidiary inventory ledger can be an aid in maintaining inventory levels at their proper levels.

Accepted Answer

The answer of A subsidiary inventory ledger can be an...

Question 20

A physical inventory should be taken at the end of every month.

Accepted Answer

The answer of A physical inventory should be taken at...

Quiz 7: Inventories