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