Devry ACCT 212 Week 4 Quiz
Question 1. (TCO 4) For a merchandising company
- the balance sheet reports the cost of the inventory that was on hand at the beginning of the period.
- the income statement reports the cost of the inventory sold during the period.
- ending inventory can be an asset or an expense.
- inventory is generally not a significant factor in their operations.
Question 2. (TCO 4) Two accounts that would appear on the financial statements of a merchandising company that are not needed by a service company are
- cost of goods sold and depreciation.
- cost of goods sold and net income.
- cost of goods sold and inventory.
- inventory and depreciation.
Question 3. (TCO 4) The inventory system that uses computer software to keep a running record of inventory on hand is the
- cost of goods sold inventory system.
- periodic inventory system.
- perpetual inventory system.
- hybrid inventory system.
Question 4. (TCO 4) All of the following costs would be included in inventory except for
- freight-in.
- advertising.
- taxes paid on the purchase price.
- insurance while in transit.
Question 5. (TCO 4) If the cost to purchase a unit of inventory does not change, ending inventory
- will be the highest under FIFO.
- will be the highest under LIFO.
- cannot be computed using the average-cost method.
- will be the same under LIFO and FIFO.
Question 6. (TCO 4) To determine cost of goods sold under the FIFO method
- the first costs into inventory are the first costs assigned to cost of goods sold.
- the last costs into inventory are the first costs assigned to cost of goods sold.
- the average cost of the inventory must be determined.
- the company must first determine the specific units sold.
Question 7. (TCO 4) Under the _____ method, ending inventory is based on the costs of the most recent purchases.
- average-cost
- FIFO
- LIFO
- specific-identification
Question 8. (TCO 4) The disclosure principle states that a company should report _____ and _____ information about itself.
- material, relevant
- important, conservative
- representational faithful, financial
- relevant, representational faithful
Question 9. (TCO 4) The lower-of-cost-or-market rule requires a company to report inventories at the lower of
- historical cost or current sales price.
- historical cost or current replacement cost.
- current replacement cost or sales invoice price.
- FIFO cost or LIFO cost.
Question 10. (TCO 4) The inventory turnover ratio
- is determined by dividing cost of goods sold by net sales.
- shows how many times the company sold its average level of inventory.
- should be high for a company that sells high-priced inventory items.
- will be lower for companies that have many low-priced items in their inventory.
