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1.The inventory system that uses the merchandise inventory account as an active account is called the: A) periodic system.;B) perpetual system.;C) LIFO system.;D) FIFO system.;2. A method of valuing inventory based on the assumption that the oldest goods will be sold first is called the: A) LIFO method.;B) average cost method.;C) specific cost method.;D) FIFO method.;3. Cost of goods sold is shown on the: A) balance sheet as an asset.;B) income statement before gross profit.;C) statement of retained earnings.;D) income statement after gross profit.;4. In order to pay the least income tax possible in periods of rising inventory costs, the company should use which of the following inventory costing methods? A) FIFO;B) LIFO;C) Average cost;D) Specific identification;5. Ignoring a write-off of inventory that will not affect the financial statements to users of the information is an example of A) conservatism.;B) consistency.;C) materiality.;D) entity.;6. A physical count of the inventory is taken when using which inventory system? A) Perpetual inventory system;B) Periodic inventory system;C) Both perpetual and periodic inventory system;D) Neither perpetual or periodic inventory system;7. Assigning LCM to the items that make up the inventory of merchandise at the end of the accounting period is an application of which of the following concepts? A) Materiality;B) Conservatism;C) Reliability;D) Full disclosure;8. If Period 1 ending inventory is understated, then: A) both cost of goods sold and net income are understated in Period 1.;B) cost of goods sold is overstated and net income is understated in Period 1.;C) cost of goods sold is understated and net income is overstated in Period 1.;D) both cost of goods sold and net income are overstated in Period 1.;9. Net sales minus estimated gross profit yields the estimated: A) ending inventory.;B) beginning inventory.;C) gross profit.;D) cost of goods sold.;10. A company has $8,200 in net sales, $1,100 in gross profit, $2,500 in ending inventory and $2,000 in beginning inventory. The company?s cost of goods sold is: A) $7,100.;B) $6,200.;C) $5,700.;D) $5,600.


Paper#78889 | Written in 18-Jul-2015

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