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Devry ACCT 212 Week 4 Quiz

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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.

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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.