41. Inventory turnover measures the length of time is takes to acquire, sell and replace the inventory.
42. In the retail inventory method, the cost to retail ratio is equal to the cost of goods sold divided by the retail price of the good sold.
43. Use of the retail inventory method requires taking a physical count of inventory.
44. If a fire destroys the merchandise inventory, the gross profit method can be used to estimate the cost of merchandise destroyed.
45. If a company uses the periodic inventory system to cost its inventory, the gross profit method is a method that can be used to check on theft when the actual inventory is taken by the company.
46.
Match the following documents used for inventory control:
1. authorizes the purchase of inventory from an approved vendorVendor’s Invoice
2. last document in the chain, use to compare all three for accuracyPurchase Order
3. establishes an initial record of the receipt of inventoryReceiving Report
47.
Match the following cost flow assumption to their inventory costing method:
1. Cost flow matches the unit sold to the unit purchased.Average Cost
2. Cost flow is in the reverse order in which the cost were incurred.Last-in, Last-out (LIFO)
3. Cost flow is an average of the costs.Specific Identification
4. Cost flow is in the order in which the costs were incurred.First-in, First-out (FIFO)
48. Under a perpetual inventory system, the amount of each type of merchandise on hand is available in the
A. customer's ledger
B. creditor's ledger
C. inventory ledger
D. merchandise inventory account
49. Taking a physical count of inventory
A. is not necessary when a periodic inventory system is used
B. should be dine near year-end
C. has no internal control relevance
D. is not necessary when a perpetual inventory system is used
50. Control of inventory should begin as soon as the inventory is received. Which of the following internal control steps is not done to meet this goal?
A. check the invoice to the receiving report
B. check the invoice to the purchase order
C. check the invoice with the person who specifically purchased the item
D. check the invoice extensions and totals