eLearning Day 113: Ch 6 Practice Questions

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1. As it relates to the purchasing process, how many documents are sent to the accounting department to be analyzed and compared for accuracy and agreement before the journal entry is made?
2. When should a company take a physical count of inventory
3. Which inventory valuation method is appropriate for a business whose inventory consists of a relatively small number of unique, high-cost items?
4. Under which inventory valuation method is ending inventory made up of the oldest purchases?
5. When merchandise sold is assumed to be in the order in which the purchases were made, the company is using which inventory valuation method?
6. What are the two most widely used methods for determining the cost of inventory 
7. Which inventory method that assigns the most recent costs to cost of goods sold?
8. Which inventory costing method reports the most current prices in ending inventory?
9. Under which inventory method do accounting records maintain a continuously updated inventory value?
10. During a period of consistently rising prices, which method of inventory will result in reporting the greatest cost of merchandise sold?
11. If merchandise inventory is being valued at cost and the price level is steadily rising, which method of inventory costing will yield the highest net income?
12. Merchandise in inventory that can be bought elsewhere at a price that is lower than at which it was originally purchased, should be recorded at cost or market price?
13. Merchandise that is out of date, spoiled, or damaged can often be sold only at a price below its original cost. The value of such merchandise is referred to as _______________.
14. Why is it important to efficiently manage your inventory levels?
15. What does inventory turnover measure?
16. What does days sales in inventory measure?

Review Exercises 6-3 and 6-7 in your textbook.