1.

Under which inventory cost flow assumption is the cost of the most recent
purchase matched first with sales revenues? 
a. FIFO
b. LIFO 
c. Average  

2. Under which inventory cost flow assumption is the cost of the most recent
purchases likely to remain in inventory? 
a. FIFO 
b. LIFO
c. Average

3. Under which inventory cost flow assumption is the oldest cost of inventory items
likely to remain on the balance sheet? 
a. FIFO
b. LIFO
c. Average  

4. The account Inventory will appear on the balance sheet as a current asset at an
amount that often reflects the __________ of the merchandise on hand.
a. Cost
b.  Sales Value
 
5. The inventory system that does NOT update the Inventory account automatically
at the time of each purchase or sales is the _______________ method/system.
a. Periodic
b. Perpetual

 
6. If a company is experiencing continuous cost increases for the merchandise that it
purchases, which cost flow assumption will result in the least amount of profit and
the least amount of income tax expense? 
a. FIFO
b. LIFO 
c. Average

7. A company in the computer industry is experiencing continuously lower costs.

Which cost flow assumption will result in less income tax expense for this company? 
a. FIFO
b. LIFO
c. Average