Question

MULTIPLE CHOICE AND TRUE/FALSE QUESTIONS (100 POINTS records, does not 1 . F. As Inventory is sold in many retail businesses, the largest expense is created A business using the perpetual Inventory system with detailed subsidiary records, does need to a physical Inventory count. 5. T.F. A detective internal control is designed to find error or misstatement after loss has occurred. 4. T. F. Purchased goods shipped FOB shipping point should be excluded from inventory of the purchaser. 5. T. . An error in the determination of inventory at the end of the period will cause an equal misstatement of assets and stockholders' equity reported at the end of the period. 6. T. E. FIFO inventory method follows the natural physical flow of goods sold. 7. T, . When the average inventory costing method is used, each unit of Inventory sold and those in ending Inventory is assigned the same unit cost. 8 T, F. When the LCM method of inventory valuation is used, individual items can be assigned values, groups of items can be assigned values but not the total costs of groups. 9. T, F. The lower of cost or market is the only method of inventory valuation that allows inventories to be assigned market values. 10. If a manufacturer ships merchandise to a retailer on consignment, the unsold merchandise should be included in the inventory of the: a. Consignee b. Retailer c. Manufacturer d. Shipper e. None of the above 11. If merchandise costs $4000, insurance costs $200, taxes cost $50, processing the purchase order costs $35, and the company receiving dept spends $15, What is the total cost of merchandise? a. $4,250 b. $4,285 c. $4,300 d. $4,000 e. None of the above 12. Merchandise inventory at the end of the year is overstated. Which of the following statements correctly states the effect of the error? a. Stockholders' equity is overstated b. Cost of goods sold is overstated c. Gross profit is understated d. Net income is understated e. None of the above.

Answer 1

1 T

2 F

3 T

4 F

5 T

6 T

7 T

8 T

9 T

10 c

11 a

12 e Overstating ending inventory will understate stockholder's equity and overstate others.