1. 10.1 What is meant by the term gross margin?
2. 10.1 Can a business change from one inventory costing method to another any time they wish? Explain.
3. 10.1 Why do consignment arrangements present a challenge in inventory management? Explain.
4. 10.1 Explain the difference between the terms FOB destination and FOB shipping point.
5. 10.1 When would a company use the specific identification method of inventory cost allocation?
6. 10.1 Explain why a company might want to utilize the gross profit method or the retail inventory method
for inventory valuation.
7. 10.1 Describe the goal of the lower-of-cost-or-market concept.
8. 10.1 Describe two separate and distinct ways to calculate goods available for sale.
9. 10.3 Describe costing inventory using first-in, first-out. Address the different treatment, if any, that must
be given for periodic and perpetual inventory updating.
10. 10.3 Describe costing inventory using last-in, first-out. Address the different treatment, if any, that must
be given for periodic and perpetual inventory updating.
11. 10.3 Describe costing inventory using weighted average. Address the different treatment, if any, that
must be given for periodic and perpetual inventory updating.
12. 10.4 How long does it take an inventory error affecting ending inventory to correct itself in the financial
statements? Explain.
13. 10.4 What type of issues would arise that might cause inventory errors?
14. 10.5 Explain the difference between the flow of cost and the flow of goods as it relates to inventory.
15. 10.5 What insights can be gained from inventory ratio analysis, such as inventory turnover ratio and
number of days’ sales in inventory ratio?