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Free Practice Quiz Question List

6 Merchandising and Inventory Online Quiz Questions

Use this free practice quiz with 20 questions to review 6 Merchandising and Inventory, test your knowledge, and prepare for your next test or exam.

20 questions
01
True or false
1 point

A retailer uses a periodic inventory system. It does not update its inventory balance or record COGS each time it sells goods.

  1. A

    True

  2. B

    False

02
True or false
1 point

A retailer's perpetual inventory records show 80 units on hand. The retailer still needs a physical count to check for shortages or recording errors.

  1. A

    True

  2. B

    False

03
Choose one
1 point

A retailer using a perpetual inventory system buys goods on credit. Which entry records the purchase?

  1. A

    Debit Purchases; credit Merchandise Inventory

  2. B

    Debit Merchandise Inventory; credit Accounts Payable

  3. C

    Debit COGS; credit Accounts Payable

  4. D

    Debit Accounts Payable; credit Sales Revenue

04
Choose one
1 point

A retailer using a perpetual system sells goods on credit. Which entry records the cost of the goods sold?

  1. A

    Debit COGS and credit Sales Revenue only

  2. B

    Debit Merchandise Inventory and credit COGS

  3. C

    Debit COGS and credit Merchandise Inventory

  4. D

    Debit Sales Revenue and credit Accounts Receivable

05
Choose one
1 point

A retailer's purchase costs are rising. Compared with LIFO, what does FIFO generally produce for COGS and ending inventory, assuming the same goods and sales?

  1. A

    COGS is generally lower and ending inventory is generally higher under FIFO

  2. B

    COGS is generally higher and ending inventory is generally lower under FIFO

  3. C

    COGS and ending inventory are always equal under FIFO

  4. D

    FIFO assigns the newest costs to COGS first

06
Choose all
1 point

Under a periodic inventory system, which items affect net purchases? Select all correct choices.

  1. A

    Freight-in

  2. B

    Sales discounts

  3. C

    Purchase returns and allowances

  4. D

    Purchase discounts

07
Choose all
1 point

Under U.S. GAAP, which inventory measurement statements are generally correct? Select all correct choices.

  1. A

    FIFO inventory is generally subject to the lower-of-cost-and-NRV rule

  2. B

    LIFO inventory is subject to the same lower-of-cost-and-NRV rule

  3. C

    Average-cost inventory is generally subject to the lower-of-cost-and-NRV rule

  4. D

    The lower-of-cost-and-NRV rule applies to every inventory method without exception

08
Written response
1 point

A retailer has 30 identical units available at a total cost of $450 and sells 18 units. Using weighted-average cost, what is COGS? Enter the exact amount in dollars.

09
Written response
1 point

Inventory measured under FIFO is expected to sell for $84. Its reasonably predictable completion and disposal costs are $5 and $3, respectively, with no other relevant costs. What is its NRV? Enter the exact amount in dollars.

10
Fill in the blank
1 point

Under a periodic inventory system, goods available for sale equals plus .

11
Fill in the blank
1 point

If ending inventory is understated, COGS is and income is .

12
Open ended
1 point

Explain the difference between a cost-flow method and an inventory valuation rule. Include one example of how the valuation rule applies to a cost-flow method.

13
Choose one
1 point

Which business is the best fit for specific identification of inventory costs?

  1. A

    A shop selling large quantities of identical low-cost pens

  2. B

    A business selling individually identifiable custom machines

  3. C

    A grocery store selling interchangeable bags of rice

  4. D

    A retailer selling identical bottles of water

14
Written response
1 point

A retailer reports sales revenue of $240, sales returns and allowances of $20, and sales discounts of $15. What are net sales? Enter the exact amount in dollars.

15
True or false
1 point

True or false: A perpetual inventory system eliminates the need for physical inventory counts because it continuously updates the inventory records.

  1. A

    True

  2. B

    False

16
Choose one
1 point

A retailer using a perpetual inventory system sells goods on credit. Which set of entries records both the revenue and the cost of the goods sold?

  1. A

    Debit Cash or Accounts Receivable and credit Sales Revenue; also debit COGS and credit Merchandise Inventory.

  2. B

    Debit Purchases and credit Cash or Accounts Payable; record no cost entry until period-end.

  3. C

    Debit Merchandise Inventory and credit Sales Revenue; also debit Cash and credit COGS.

  4. D

    Debit Sales Returns and Allowances and credit Merchandise Inventory; record no revenue entry.

17
Written response
1 point

A dealer sells distinct, high-value custom equipment and can track the actual cost of each unit sold. Which cost-flow method is especially suitable?

18
Choose one
1 point

A business has purchases of $50,000\$50{,}000, purchase returns and allowances of $3,000\$3{,}000, purchase discounts of $1,000\$1{,}000, and freight-in of $2,000\$2{,}000. What amount should it include as net purchases?

  1. A

    $42,000

  2. B

    $46,000

  3. C

    $48,000

  4. D

    $56,000

19
Choose one
1 point

A retailer’s purchase costs are rising. Compared with FIFO, what outcome does LIFO generally produce?

  1. A

    LIFO generally produces lower COGS and higher ending inventory than FIFO.

  2. B

    LIFO generally produces higher COGS and lower ending inventory than FIFO.

  3. C

    FIFO and LIFO must produce equal COGS and ending inventory.

  4. D

    FIFO generally produces higher COGS and lower ending inventory than LIFO.

20
Choose one
1 point

A company overstates its ending inventory. What is the resulting effect on COGS and income?

  1. A

    COGS is understated, and income is overstated.

  2. B

    COGS is overstated, and income is understated.

  3. C

    Both COGS and income are understated.

  4. D

    Both COGS and income are overstated.