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Solutions

Multiple Choice Questions - Solutions​

  1. Which inventory valuation method is NOT allowed in Luxembourg?

    • Answer: c) LIFO (Last-In, First-Out) is not allowed in Luxembourg.

  2. In a periodic inventory system, cost of goods sold is calculated as:

    • Answer: b) COGS = Beginning Inventory + Purchases - Ending Inventory.

  3. If ending inventory is overstated by €5,000, cost of goods sold is:

    • Answer: b) If ending inventory is overstated, COGS is understated (by the same amount).

  4. Which PCN account is used for merchandise inventory in a retail store?

    • Answer: d) 321000 is Merchandise (Marchandises) for retail inventory.

  5. Inventory turnover is calculated as:

    • Answer: b) Inventory Turnover = Cost of Goods Sold ÷ Average Inventory.

  6. In a perpetual inventory system with FIFO:

    • Answer: b) In perpetual system, cost is assigned at each sale using FIFO.

  7. Days Sales in Inventory measures:

    • Answer: c) Days Sales in Inventory measures average days inventory is held before sale.

  8. Weighted average in a perpetual system:

    • Answer: b) Perpetual weighted average recalculates (moving average) with each purchase.

  9. If ending inventory is understated, net income is:

    • Answer: b) If ending inventory is understated, COGS is overstated, so net income is understated.

  10. In Luxembourg, inventory valuation methods must be:

  • Answer: b) Methods must be consistent and disclosed in financial statements.

Note: Solutions will be provided in a separate solutions manual. For now, students should work through problems and cases, then compare with instructor-provided solutions or discuss in class.