Question: One reason businesses need an inventory control system is

Answer: to evaluate the effectiveness of advertising campaigns.

to determine when to mark down merchandise.

for reporting inventory in the financial statements.

all of these are true.

Question: Which statement about Best Buy’s computerized inventory system is correct?

Answer: It allows the company to analyze sales patterns to determine when to mark down merchandise or when to restock seasonal merchandise.

Question: Which cost flow assumption assumes that the first units purchased are the first units sold?

Answer: FIFO

Question: Which cost flow assumption assumes that the last units purchased are the first units sold?

Answer: LIFO

Question: When the weighted average cost method is used in a perpetual inventory system, a weighted average unit cost for each item is computed

Answer: each time a purchase is made.

Question: Jacobs Company has inventory of 15 units at a cost of $12 each on June 1. On June 5, Jacobs purchased 10 units at $13 per unit. On June 12, it purchased 20 units at $14 per unit. On June 17, it sold 30 units. Using FIFO, what is the value of the inventory at June 17 after the sale?

Answer: $210

Question: Which inventory method results in the highest net income during periods of rising prices?

Answer: FIFO

Question: Which inventory method results in the highest net income during periods of falling prices?

Answer: LIFO

Question: The lower-of-cost-or-market method can be applied to

Answer: each item of inventory.

each major class or category of inventory.

total inventory as a whole.

All of these choices are correct.

Question: Merchandise inventory is classified as __________ on the balance sheet.

Answer: a current asset