Objective type questions on periodic inventory system.

1. In a periodic inventory system, the cost of purchases is debited to:

A. Purchases

B. Cost of goods sold

C. Inventory

D. Accounts payable

2. In a period when prices are rising and inventory quantities are stable, the inventory method that would result in the highest ending inventory is:

A. weighted average

B. FIFO

C. LIFO

D. none of the above

3. Ending inventory is equal to the cost of items on hand plus:

A. items in transit sold f.o.b. shipping point

B. purchases in transit f.o.b. destination

C. items in transit sold f.o.b. destination

D. None of the above

4. A physical inventory count is taken when using which of the following inventory methods?

A. Perpetual

B. Periodic

C. Interim

D. both perpetual and periodic methods

5. The LIFO Conformity Rule states that if LIFO is used for:

A. one class of inventory, it must be used for all classes of inventory

B. tax purposes, it must be used for financial reporting

C. one company in an affiliated group, it must be used by all companies in an affiliated group

D. domestic companies, it must be used by foreign partners

6. The cost of goods available for sale is allocated between

A. beginning inventory and ending inventory

B. beginning inventory and cost of goods on hand

C. ending inventory and cost of goods sold

D. beginning inventory and cost of goods sold

7. For a typical manufacturing company, the most common critical point for recognizing revenue is the date:

A. an order is received

B. production is completed

C. the product is delivered

D. the payment is received