Posted: April 21st, 2016

. Which of the following items would not be used in the calculation of the cost to retail ratio if the FIFO retail inventory method were used to determine the ending inventory?

7. If the net markdowns are excluded from the calculation of the cost to retail ratio in the retail inventory method, the ending inventory s valuation is lower because of which of the following effects on the cost to retail ratio?
The denominator of the ratio will be lower, which results in a higher cost to retail ratio.
The denominator of the ratio will be higher, which results in a lower cost to retail ratio.
The numerator of the ratio will be higher, which results in a higher cost to retail ratio.
The numerator of the ratio will be lower, which results in a lower cost to retail ratio.

8. Which of the following variations of the retail inventory method would generally result in the lowest cost to retail ratio in a period of rising prices?
FIFO
LIFO
average cost
lower of average cost or market

9. Which of the following items would not be used in the calculation of the cost to retail ratio if the FIFO retail inventory method were used to determine the ending inventory?
net markdowns
purchases
beginning inventory
freight in charges

10. If purchases are recorded correctly but ending physical inventory is understated, which one of the following situations occurs for the current year?
Working capital is understated and net income is overstated.
Working capital and net income are understated.
Working capital is overstated and net income is understated.
Working capital and net income are overstated.