Question 1. A company purchased 10 units for $5 on January 3. It purchased 10 units for $7 each on February 28. It sold 10 units on March 1. If the company uses the first-in, first-out (FIFO) inventory costing method, what is the dollar amount for ending inventory on the December 31 balance sheet assuming that the company uses a perpetual inventory system?

$50
$60
$70
$120

Question 2. Our company sold merchandise on account with a cost of $700 for $1,000. Our company uses a perpetual inventory system. What account and amount would we credit to record the cost of the merchandise sold?

accounts receivable, $1,000
sales, $1,000
merchandise inventory, $700
cost of goods sold, $700

Question 3 In a perpetual inventory system:

we maintain a running record of inventory and cost of goods sold.
the company is not required to complete a periodic inventory
inventory and cost of goods sold are updated only when a physical count of inventory is taken
we can only use either the FIFO or LIFO methods

Question 4 In a period of rising costs, which inventory method results in the lowest dollar value for ending inventory?

FIFO
LIFO
weighted-average
periodic

Question 5 In a period of rising costs, which inventory method results in highest cost of goods sold and lowest gross profit?

FIFO
LIFO
weighted-average
periodic

Question 6 Our company sold merchandise on account with a cost of $700 for $1,000. Our company uses a perpetual inventory system. What account and amount would we debit to record the cost of the merchandise sold?

accounts receivable, $1,000
sales, $1,000
merchandise inventory, $700
cost of goods sold, $700

Question 7 Our company sold merchandise on account with a cost of $700 for $1,000. Our company uses a perpetual inventory system. What account and amount would we credit to record the sales revenue?

accounts receivable, $1,000
sales, $1,000
merchandise inventory, $700
cost of goods sold, $700

Question 8 When using the weighted-average inventory costing method in a perpetual inventory system, a new weighted-average cost per unit is calculated:

only at the end of the accounting period
every time units of inventory are sold
each time new merchandise inventory is purchased
every time there is either a purchase or a sale of merchandise

Question 9 The two main inventory accounting systems are:

FIFO and LIFO
perpetual and periodic
cash method and accrual method
weighted-average and specific identification

Question 10 The loss of inventory that occurs because of theft, damage, and errors is referred to as:

loss of market value
shrinkage
inventory loss expense
inventory error expense