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BAT Quiz - Inventory



Multiple Choice
Identify the choice that best completes the statement or answers the question.
 

 1. 

The factor which determines whether or not goods should be included in a physical count of inventory is
a.
physical possession.
b.
legal title.
c.
management's judgement.
d.
whether or not the purchase price has been paid.
 

 2. 

If goods in transit are shipped FOB shipping point to a carrier named by the buyer
a.
the seller has legal title to the goods until they are delivered.
b.
the buyer has legal title to the goods when a public carrier accepts the goods from the seller.
c.
the transportation company has legal title to the goods while the goods are in transit.
d.
no one has legal title to the goods until they are delivered.
 

 3. 

All of the following are internal control procedures related to a physical inventory count except
a.
employees who do not have custodial or record keeping responsibility for the inventory should do the counting.
b.
pre-numbered inventory tags should be used and all tags accounted for.
c.
inventory that has been counted should be removed to a separate warehouse to prevent double counting.
d.
at the end of the count, a supervisor should ensure that all inventory items are tagged.
 

 4. 

The FIFO inventory method assumes that the cost of the latest units purchased are
a.
the last to be allocated to cost of goods sold.
b.
the last to be allocated to ending inventory.
c.
the first to be allocated to cost of goods sold.
d.
not allocated to cost of goods sold or ending inventory.
 

 5. 

Which of the following items will increase the cost of goods purchased for the buyer of goods?
a.
Purchase returns and allowances granted by the seller
b.
Volume discounts taken by the purchaser
c.
Freight charges paid by the seller
d.
Freight charges paid by the purchaser
 

 6. 

At the end of the period, 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 purchased.
 

 7. 

The selection of an appropriate inventory cost flow assumption for an individual company is made by
a.
the external auditors.
b.
the CICA.
c.
the internal auditors.
d.
management.
 

 8. 

In periods of rising prices, the inventory method which results in the inventory value on the balance sheet that is closest to current cost is the
a.
FIFO method.
b.
Specific identification.
c.
Average cost method.
d.
Tax method.
 

 9. 

Two companies report the same cost of goods available for sale but each employs a different inventory costing method.  If the price of goods has increased during the period, then the company using
a.
Average Cost will have the highest ending inventory value.
b.
FIFO will have the highest cost of good sold.
c.
FIFO will have the highest ending inventory value.
d.
Average Cost will have the lowest cost of goods sold.
 

 10. 

If companies have identical inventoriable costs but use different inventory flow assumptions when the price of goods have not been constant, then the
a.
Cost of goods sold of the companies will be identical.
b.
Cost of goods available for sale of the companies will be identical.
c.
Ending inventory of the companies will be identical.
d.
Net income of the companies will be identical.
 

 11. 

The consistent application of an inventory costing method is essential for
a.
conservatism.
b.
accuracy.
c.
comparability.
d.
efficiency.
 

 12. 

The lower of cost and market basis of valuing inventories is an example of
a.
comparability.
b.
the cost principle.
c.
conservatism.
d.
consistency.
 



 
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