An excess of physical inventory over book inventory is usually caused by:

a. customer shoplifting.

b. markdowns.

c. bookkeeping errors.

d. too high of markups.

e. employee discounts.

Answer: C

Fashion Barn's total cost valuation of inventory is $120,000 and its total retail valuation is $300,000. The adjusted retail book inventory figure has been determined to be $250,000. Using the retail method of inventory valuation, what would be Fashion Barn's approximate closing inventory figure at cost?

a. $50,000

b. $70,000

c. $100,000

d. $130,000

e. $180,000

Answer: C

Which of the following is an advantage of using the retail method of inventory valuation versus the cost method?

a. Physical inventories using retail prices are subject to more error

b. Inventories need to be taken in order to prepare the accounting statements

c. Physical inventories take long periods of time to complete

d. It provides an automatic, conservative valuation of ending inventory

e. Heavy reliance on bookkeeping activities

Answer: D

The _____ method of inventory record keeping allows for more "inventory profits" during inflationary periods.

a. revenue

b. retail

c. LIFO

d. FIFO

e. inflationary accounting

Answer: D

Your have just calculated the cost complement. Under the retail method of inventory valuation, what do you do next?

a. Determine planned sales

b. Calculate reductions from retail value

c. Convert adjusted retail book inventory to cost

d. Determine planned purchases at cost

e. Determine the cost complement's inverse

Answer: B

Holly's Arts and Crafts had a retail inventory available for sale of $700,000, while sales were $210,000, markdowns were $5,000 and discounts were $2,000. What is the ending inventory at retail?

a. $490,000

b. $483,000

c. $485,000

d. $693,000

e. $695,000

Answer: B

___ are the dollar amount by which a physical inventory value is smaller than the value that the book inventory records indicate.

a. Inventory reductions

b. Discounts to cost

c. Cost allocations

d. Shortages

e. Overages

Answer: D

When physical inventory value exceeds book inventory value a retailer is said to have:

a. excess profits.

b. shortages.

c. overages.

d. markups.

e. inventory gains.

Answer: C

Which of the following is an example of a cash inflow?

a. Paying for merchandise

b. Rent expense

c. Utilities expense

d. Paying dividends

e. Sale of fixed assets

Answer: E

Which of the following is an example of a cash outflow?

a. Cash sales

b. Taxes

c. Collecting accounts receivable

d. Collecting notes receivable

e. Sale of stock

Answer: B

Which of the following types of retail operations would be most likely to use the cost method of inventory valuation?

a. A grocery store

b. A antique furniture store

c. A full-line department store

d. A discount department store

e. A bakery

Answer: B

The total cost valuation of a retailer's inventory is $75,000 and the total retail valuation is $130,000. Approximately how much of every retail sales dollar is made up of merchandise cost?

a. 36.6 cents

b. 42.3 cents

c. 57.7 cents

d. 73.3 cents

e. $1.73

Answer: C

Art's Appliances has accounts payable of $65,000, payroll payable of $2,750, mortgage payable of $38,500, current notes payable of $12,000, and taxes payable of $3,100. Art's current liabilities are:

a. $12,000

b. $38,500

c. $82,850

d. $121,350

e. $178,900

Answer: C

Current liabilities include all of the following EXCEPT:

a. notes payable within the six months.

b. payroll payable.

c. mortgage payable.

d. accounts payable.

e. taxes payable.

Answer: C

____ are amounts owed to vendors for goods and services.

a. Notes payable

b. Payroll payable

c. Mortgage payable

d. Accounts payable

e. Taxes payable

Answer: D

A statement of cash flow:

a. lists all income and expenses for a given time period.

b. involves forecasting the cash value of the retailer's inventory.

c. involves forecasting the present value of accounts receivable.

d. explains the changes in cash and cash equivalents from one accounting period to the next by showing all cash inflows and all cash outflows for the given time period.

e. shows if the firm made money over a given time period.

Answer: D

____ are amounts that customers owe the retailer for goods and services.

a. Total assets

b. Accounts receivable

c. Current assets

d. Operating expenses

e. Prepaid expenses

Answer: B

____ are those items for which the retailer has already paid, but the service has not been completed.

a. Total assets

b. Accounts receivable

c. Current assets

d. Operating expenses

e. Prepaid expenses

Answer: E

____ is an intangible asset, usually based on customer loyalty that a retailer pays for when buying an existing business.

a. Prepaid expenses

b. Cash

c. Goodwill

d. Inventory

e. Accounts payable

Answer: C

A(n) _____ is any legitimate financial claim against the retailer's assets.

a. goodwill

b. asset

c. account receivable

d. liability

e. cost of goods sold

Answer: D