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

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

a. revenue

b. retail

c. LIFO

d. FIFO

e. inflationary accounting

Answer: D