AC 310 Lab Problems 11.9.

2021
Chapters 8 and 9

Chapter 8

1. Physical inventory counts are never made with perpetual inventory systems
a. True
b. False

2. In a period when costs are rising and inventory quantities are stable, the inventory
method that would result in the highest ending inventory is:
a. FIFO
b. LIFO
c. Weighted Average
d. Moving Average

3. In a perpetual inventory system, the cost of inventory sold is:

a. Debited to accounts receivable
b. Debited to cost of goods sold
c. Credited to cost of goods sold
d. Not recorded at the time goods are sold

4. FIFO will always produce the same amount for cost of goods sold in a periodic inventory
system and a perpetual inventory system.
a. True
b. False

5. One difference between periodic and perpetual inventory systems is:

a. Cost of goods sold is not recorded under a perpetual system until the end of the
period.
b. Cost of goods sold is not recorded under a periodic system until the end of the
period.
c. Cost of goods sold is always significantly higher under the perpetual system
d. Cost of goods sold is always significantly higher under the periodic system

6. The LIFO Conformity Rule states that if LIFO is used for:

a. One class of inventory, it must be used for all classes of inventory.
b. Tax purposes, it must be used for financial reporting.
c. One company in an affiliated group, it must be used by all companies in an
affiliated group.
d. Domestic companies, it must be used by foreign partners.
AC 310 Lab Problems 11.9.2021
Chapters 8 and 9

Chapter 9

7. Losses on reduction to NRV may be charged to either cost of goods sold or to a line item
among operating expenses.
a. True
b. False

8. The following information pertains to one item of inventory of the Forge Company:
Per unit

Cost $270

Replacement cost 225

Selling price 292
Costs to sell 52 
Applying the lower of cost or net realizable value rule, this item should be valued at:

a. $225
b. $240
c. $270
d. $292

9. Assuming that inventory write downs are not unusual for the company, what is the
journal entry to record the write down from question 8?