1.

2.
3. The lower of cost and net realisable value rule for inventory is
an example of the principle of:
Answer
a. conservatism
b. consistency
c. historic cost
d. relevancexxxxxxxxxxxx

e. reliability

1. Using the periodic inventory control method, entries are made in

the inventory ledger account when inventory is:
Answer
a. delivered
b. paid for
c. returned
d. sold
e. none of the above

1 points

Question 2
1.

Which of the following statements about last-in, first-out (LIFO)

assumption is true?
Answer
a. LIFO assumes that inventory on hand consists of the oldest
units.
b. LIFO assumes that ending inventory and cost of goods sold
are comprised of a mixture of old and new units.
c. LIFO results in newer costs appearing in the balance sheet.
d. LIFO assumes that cost of goods sold consists of the oldest
units.
e. LIFO results in the same ending inventory valuation
irrespective of whether a periodic or perpetual control
method is used.
1 points

Question 3
1.
Which of the following statements about the use of the first-in,
first-out (FIFO) assumption is false?
Answer
a. The FIFO assumption assigns the more recent purchase costs
to the balance sheet inventory asset account.
b. Ending inventory valuation using the FIFO assumption is not
affected by the inventory control method used.
c. In periods of rising prices FIFO produces a higher profit
than last-in first-out (LIFO) assumption.
d. The FIFO assumption produces inventory asset values that are
based on older purchase costs.
e. The FIFO assumption is allowed in Australia.

1. The perpetual inventory control method has which of the following

advantages over the periodic control method?

Answer
a. ability to distinguish theft from other sources of inventory
loss
b. availability of details of number of items on hand
c. elimination of inventory shortages
d. lower cost of operation
e. physical count of inventory (i.e., stocktakes) not required

Question 1
1.
The following information relates to Moderate Ltd:
Net Sales: $345,000
Beginning Inventory: $60,000
Ending Inventory: $36,000
Cost of Goods Sold: $210,000
What were the purchases for the period?
Answer
a. $135,000
b. $186,000
c. $234,000
d. $246,000
e. $306,000

1 points

Question 2
1.
Using the periodic inventory control method, entries are made in
the inventory ledger account when inventory is:
Answer
a. delivered

b. paid forxxxxxxxxxxxx
c. returned
d. soldxxxxxxxxxxxxxxxxx
e. none of the above

1 points

Question 3
1.
A company has four products and has 100 units of each in stock. The
cost and net realisable value of each of the products are:
Product V: Cost $10, Net Realisable Value $8
Product X: Cost $8, Net Realisable Value $7
Product Y: Cost $8, Net Realisable Value $9
Product Z: Cost $5, Net Realisable Value $10
The value of inventory in the balance sheet after applying the lower
of cost and net realisable value rule should be:
Answer
a. $1,300
b. $1,500
c. $2,800
d. $3,100
e. $3,400

1 points

Question 4
1.
Which of the following statements about the use of the weighted
average / moving average assumption is true?
Answer
a. The valuation of inventory in the balance sheet is between
that which would be the case with the use of last-in first-out
(LIFO) assumption and the first-in first-out (FIFO)
assumption.
b. When prices are rising, it shows lower balance sheet figures
than the last-in first-out (LIFO) assumption.
c. When prices are falling, it shows lower balance sheet figures
than the first-in first-out (FIFO) assumption.
d. Its use is not permitted in Australia.
e. The valuation of inventory in the balance sheet is unaffected
by the use of either the periodic or perpetual inventory
control methods.
1 points

Question 5
1.
In a period of rising purchase prices, which cost flow assumption
provides the highest net profit?
Answer
a. First-in first-out (FIFO)
b. Last-in first-out (LIFO)
c. Moving / weighted average

d. Specific identification
e. It depends on the rate of inflation

1 points

Question 6
1.
During the year ended 30 June 2010, Rico Ltd has net sales of
$750,000 and net purchases of $440,000. Cost of goods sold was
$475,000. What was Rico Ltd's gross profit for the year ended 30
June 2010?
Answer
a. $240,000
b. $275,000
c. $310,000
d. $475,000
e. $750,000

1 points

Question 7
1.
Which of the following statements about the use of the first-in,
first-out (FIFO) assumption is false?
Answer
a. The FIFO assumption assigns the more recent purchase costs
to the balance sheet inventory asset account.

b. Ending inventory valuation using the FIFO assumption is not

affected by the inventory control method used.
c. In periods of rising prices FIFO produces a higher profit
than last-in first-out (LIFO) assumption.
d. The FIFO assumption produces inventory asset values that are
based on older purchase costs.
e. The FIFO assumption is allowed in Australia.

1 points

Question 8
1.
Harry employs a perpetual inventory system. When a customer returns
merchandise to Harry that was purchased on credit, which of the
following entries would Harry make?
Answer
a. Dr Accounts Receivable; Cr Sales Returns
b. Dr Cash; Cr Accounts Receivable
c. Dr Sales Returns; Cr Cash
d. Dr Sales Returns; Cr Accounts Receivable
e. Dr Sales Returns; Cr Inventory

1 points

Question 9
1.
Which of the following ledger accounts is not found in the ledger
of an enterprise employing the periodic inventory control method?

Answer
a. cost of goods sold
b. discount expense
c. discount revenue
d. purchases
e. purchase returnsxxxxxxxxxxxxxxx

1 points

Question 10
1.
The following lots of a particular commodity were available for sale
during the year:
10 units at $60

Beginning inventory

25 units at $63

First purchase

30 units at $64

Second purchase

15 units at $70

Third purchase

The firm uses the periodic inventory control system and there are
20 units of the commodity on hand at the end of the year. What is
the valuation of inventory at the end of the year using the
first-in first-out assumption?
Answer
a. $1,200
b. $1,230
c. $1,286

d. $1,370
e. $1,400




222222222222222222222222222222222222222

1. A company has four products and has 100 units of each in stock. The
cost and net realisable value of each of the products are:
Product V: Cost $10, Net Realisable Value $8
Product X: Cost $8, Net Realisable Value $7
Product Y: Cost $8, Net Realisable Value $9
Product Z: Cost $5, Net Realisable Value $10
The value of inventory in the balance sheet after applying the lower
of cost and net realisable value rule should be:
Answer
a. $1,300
b. $1,500
c. $2,800
d. $3,100
e. $3,400

1 points

Question 2
1.

The following lots of a particular commodity were available for sale

during the year:
10 units at $60

Beginning inventory

25 units at $63

First purchase

30 units at $64

Second purchase

15 units at $70

Third purchase

The firm uses the periodic inventory control system and there are
20 units of the commodity on hand at the end of the year. What is
the valuation of inventory at the end of the year using the
first-in first-out assumption?
Answer
a. $1,200
b. $1,230
c. $1,286
d. $1,370
e. $1,400

1 points

Question 3
1.
Which of the following statements about last-in, first-out (LIFO)
assumption is true?
Answer
a. LIFO assumes that inventory on hand consists of the oldest
units.

b. LIFO assumes that ending inventory and cost of goods sold

are comprised of a mixture of old and new units.
c. LIFO results in newer costs appearing in the balance sheet.
d. LIFO assumes that cost of goods sold consists of the oldest
units.
e. LIFO results in the same ending inventory valuation
irrespective of whether a periodic or perpetual control
method is used.
1 points

Question 4
1.
Harry employs a perpetual inventory system. When a customer returns
merchandise to Harry that was purchased on credit, which of the
following entries would Harry make?
Answer
a. Dr Accounts Receivable; Cr Sales Returns
b. Dr Cash; Cr Accounts Receivable
c. Dr Sales Returns; Cr Cash
d. Dr Sales Returns; Cr Accounts Receivable
e. Dr Sales Returns; Cr Inventory

1 points

Question 5
1.
Which of the following statements about the use of the weighted
average / moving average assumption is true?

Answer
a. The valuation of inventory in the balance sheet is between
that which would be the case with the use of last-in first-out
(LIFO) assumption and the first-in first-out (FIFO)
assumption.
b. When prices are rising, it shows lower balance sheet figures
than the last-in first-out (LIFO) assumption.
c. When prices are falling, it shows lower balance sheet figures
than the first-in first-out (FIFO) assumption.
d. Its use is not permitted in Australia.
e. The valuation of inventory in the balance sheet is unaffected
by the use of either the periodic or perpetual inventory
control methods.
1 points

Question 6
1.
In a period of rising purchase prices, which cost flow assumption
provides the highest net profit?
Answer
a. First-in first-out (FIFO)
b. Last-in first-out (LIFO)
c. Moving / weighted average
d. Specific identification
e. It depends on the rate of inflation

1 points

Question 7

1.
Using the periodic inventory control method, entries are made in
the inventory ledger account when inventory is:
Answer
a. delivered
b. paid for
c. returned
d. sold
e. none of the above

1 points

Question 8
1.
The perpetual inventory control method has which of the following
advantages over the periodic control method?
Answer
a. ability to distinguish theft from other sources of inventory
lossxxxxxxx
b. availability of details of number of items on hand
c. elimination of inventory shortages
d. lower cost of operation
e. physical count of inventoryxxxxxxxxxxxx (i.e., stocktakes)
not required
1 points

Question 9
1.
Which of the following statements about the use of the first-in,
first-out (FIFO) assumption is false?
Answer
a. The FIFO assumption assigns the more recent purchase costs
to the balance sheet inventory asset account.
b. Ending inventory valuation using the FIFO assumption is not
affected by the inventory control method used.
c. In periods of rising prices FIFO produces a higher profit
than last-in first-out (LIFO) assumption.
d. The FIFO assumption produces inventory asset values that are
based on older purchase costs.
e. The FIFO assumption is allowed in Australia.

1 points

Question 10
1.
The following information relates to Moderate Ltd:
Net Sales: $345,000
Beginning Inventory: $60,000
Ending Inventory: $36,000
Cost of Goods Sold: $210,000
What were the purchases for the period?
Answer
a. $135,000

b. $186,000
c. $234,000
d. $246,000
e. $306,000

1. A company has four products and has 100 units of each

in stock. The cost and net realisable value of each
of the products are:
Product V: Cost $10, Net Realisable Value $8
Product X: Cost $8, Net Realisable Value $7
Product Y: Cost $8, Net Realisable Value $9
Product Z: Cost $5, Net Realisable Value $10
The value of inventory in the balance sheet after
applying the lower of cost and net realisable value
rule should be:
Answer
a. $1,300
b. $1,500
c. $2,800
d. $3,100
e. $3,400

1 points

Question 2
1.
The perpetual inventory control method has which of
the following advantages over the periodic control
method?
Answer
a. ability to distinguish theft from other
sources of inventory loss
b. availability of details of number of items on
hand
c. elimination of inventory shortages
d. lower cost of operation
e. physical count of inventory (i.e., stocktakes)
not required
1 points

Question 3
1.
Using the periodic inventory control method, entries
are made in the inventory ledger account when
inventory is:
Answer
a. delivered
b. paid for
c. returned
d. sold

e. none of the above

1 points

Question 4
1.
Which of the following statements about last-in,
first-out (LIFO) assumption is true?
Answer
a. LIFO assumes that inventory on hand consists
of the oldest units.
b. LIFO assumes that ending inventory and cost of
goods sold are comprised of a mixture of old
and new units.
c. LIFO results in newer costs appearing in the
balance sheet.
d. LIFO assumes that cost of goods sold consists
of the oldest units.
e. LIFO results in the same ending inventory
valuation irrespective of whether a periodic
or perpetual control method is used.
1 points

Question 5
1.
Which of the following statements about the use of the
first-in, first-out (FIFO) assumption is false?
Answer
a. The FIFO assumption assigns the more recent
purchase costs to the balance sheet inventory
asset account.

b. Ending inventory valuation using the FIFO

assumption is not affected by the inventory
control method used.
c. In periods of rising prices FIFO produces a
higher profit than last-in first-out (LIFO)
assumption.
d. The FIFO assumption produces inventory asset
values that are based on older purchase costs.
e. The FIFO assumption is allowed in Australia.

1 points

Question 6
1.
The following information relates to Moderate Ltd:
Net Sales: $345,000
Beginning Inventory: $60,000
Ending Inventory: $36,000
Cost of Goods Sold: $210,000
What were the purchases for the period?
Answer
a. $135,000
b. $186,000
c. $234,000
d. $246,000
e. $306,000

1 points

Question 7
1.
Which of the following ledger accounts is not found
in the ledger of an enterprise employing the periodic
inventory control method?
Answer
a. cost of goods sold
b. discount expense
c. discount revenue
d. purchases
e. purchase returns

1 points

Question 8
1.
The lower of cost and net realisable value rule for
inventory is an example of the principle of:
Answer
a. conservatism
b. consistency
c. historic cost

d. relevance
e. reliability

1 points

Question 9
1.
Harry employs a perpetual inventory system. When a
customer returns merchandise to Harry that was
purchased on credit, which of the following entries
would Harry make?
Answer
a. Dr Accounts Receivable; Cr Sales Returns
b. Dr Cash; Cr Accounts Receivable
c. Dr Sales Returns; Cr Cash
d. Dr Sales Returns; Cr Accounts Receivable
e. Dr Sales Returns; Cr Inventory

1 points

Question 10
1.
The following lots of a particular commodity were
available for sale during the year:
10 units at $60

Beginning inventory

25 units at $63

First purchase

30 units at $64

Second purchase

15 units at $70

Third purchase

The firm uses the periodic inventory control system

and there are 20 units of the commodity on hand at the
end of the year. What is the valuation of inventory
at the end of the year using the first-in first-out
assumption?
Answer
a. $1,200
b. $1,230
c. $1,286
d. $1,370
e. $1,400

1 points