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Inventory Cost & Valuation Chapter Exam

Exam Instructions:

Choose your answers to the questions and click 'Next' to see the next set of questions. You can skip questions if you would like and come back to them later with the yellow "Go To First Skipped Question" button. When you have completed the practice exam, a green submit button will appear. Click it to see your results. Good luck!

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Question 1 1. Which goods in transit are counted in the merchandise inventory of the buyer as soon as the items are shipped?

Question 2 2. Which costing method assumes that the most recent inventory items purchased are the first ones to be sold, and inventory items purchased first are sold last?

Question 3 3. Which of the following statements is TRUE?

Question 4 4. What is one reason for calculating direct costs?

Question 5 5. Janice runs a ski shop and is finalizing her reports for the month of May. At the start of the month, her merchandise inventory stood at $10,300. She made $14,600 in inventory purchases during the month and by the end of May her merchandise inventory stood at $11,700. What was her cost of goods sold for this period?

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Question 6 6. The business that owns goods placed on consignment is called what?

Question 7 7. What is the formula for calculating net income?

Question 8 8. Which of the following are discounts offered to customers in exchange for paying their bill within a given time frame?

Question 9 9. What is the cost of moving merchandise from one place to another called?

Question 10 10. Which of the formulas below can be used to calculate the total cost (TC)?

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Question 11 11. Why is inventory valuation used?

Question 12 12. Which of the following are associated with variable costs?

Question 13 13. Ken is looking through the basement of his ceramics store, and he finds three obsolete plates and a bowl that has been smashed into five pieces. Which of these goods could be counted in merchandise inventory? Why?

Question 14 14. Which type of inventory system requires closing entries?

Question 15 15. Sam sells his inventory from a booth. He grabs whichever item he can and, at the end of the month, has sold everything. Which costing method would Sam use?

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Question 16 16. Costs that fluctuate proportionally with the fluctuation of output are called _____ costs.

Question 17 17. How are fixed costs related to production levels?

Question 18 18. What is the accounting equation for calculating the cost of purchasing inventory?

Question 19 19. Why is marginal cost useful?

Question 20 20. Helen does not have a lot of staff but has a great point-of-sales system that automatically registers the sale of the item and adjusts the inventory. Why would she use a perpetual inventory system?

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Question 21 21. The _____ refers to the total dollar amount a business paid for the products it sold.

Question 22 22. The formula for total variable cost is _____.

Question 23 23. Identify the statement that best describes fixed costs.

Question 24 24. Which of the following types of merchandising companies buys items in bulk and resells them to retailers or other wholesalers?

Question 25 25. Leno's Tux Boutique is in dire need of additional blue bow ties for the start of wedding season. He has to quickly order more for his inventory. Which of the following would NOT incur a shortage cost for the business?

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Question 26 26. Which of the following accounts are debited in a credit sale?

Question 27 27. What do we call items that are taken from one business to another to be sold on a commission basis?

Question 28 28. Which inventory system records inventory on a continual basis?

Question 29 29. What is one way direct costs are calculated?

Question 30 30. If you plot different marginal costs on a graph, what shape will be produced?

Inventory Cost & Valuation Chapter Exam Instructions

Choose your answers to the questions and click 'Next' to see the next set of questions. You can skip questions if you would like and come back to them later with the yellow "Go To First Skipped Question" button. When you have completed the practice exam, a green submit button will appear. Click it to see your results. Good luck!

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