Periodic and Perpetual Inventory Quiz
12 multiple-choice questions with answers and explanations · 5 easy, 5 medium, 2 hard
How the periodic and perpetual inventory systems record purchases and sales, when cost of goods sold is found, and how shrinkage is detected.
- 1FIFO in a Period of Rising PricesDuring a period of steadily rising purchase prices, FIFO (compared with weighted-average) reports:easy
- 2What a Perpetual System TracksUnder a perpetual inventory system, the Inventory account balance is:easy
- 3US GAAP: LIFO as an Inventory Cost FormulaUnder US GAAP, is last-in, first-out (LIFO) an acceptable inventory cost flow assumption?easy
- 4Periodic vs Perpetual Inventory: When Is Cost of Goods Sold Found?Under a PERIODIC inventory system, cost of goods sold is determined:easy
- 5Periodic Inventory System: Which Account Records Purchases of Goods?Under a periodic inventory system, goods bought for resale during the year are debited to:easy
- 6Periodic System — Computing COGSUnder a periodic system: beginning inventory $20,000, net purchases $130,000, ending inventory $25,000. Cost of goods sold is:medium
- 7FIFO — Ending Inventory ComputationPurchases during the year: 100 units @ $10, then 100 units @ $12, then 100 units @ $14. There was no beginning inventory and 120 units remain at year-end. Under FIFO, ending inventory is:medium
- 8Purchase Discount Taken — Perpetual, Gross MethodInventory costing $5,000 was bought on terms 2/10, n/30 (gross method, perpetual system). The invoice is paid within the discount period. The cash paid and the credit to Inventory are:medium
- 9Recording a Purchase Under a Perpetual SystemUnder a perpetual inventory system, a buyer pays $300 of freight to have purchased merchandise shipped to its warehouse (terms FOB shipping point, making the freight the buyer’s responsibility). This freight cost is:medium
- 10Perpetual vs Periodic Inventory: Which System Reveals Shrinkage?Which inventory system allows losses from theft or damage (shrinkage) to be measured, and why?medium
- 11Weighted-Average Cost — Ending InventoryBeginning inventory: 200 units @ $5.00. Purchases: 300 units @ $6.00, then 500 units @ $6.60. 400 units remain at year-end. Under the periodic weighted-average method, ending inventory is:hard
- 12Inventory ShrinkageUnder a perpetual inventory system, the Inventory account shows a balance of $52,000, but a physical count reveals only $49,500 of inventory on hand. The adjusting entry required is:hard