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Adv. Accounting - Ch. 6 Review
Test Description: INVENTORY!
Instructions: Answer all questions to get your test result.
1) The 2 methods businesses may use to determine the # of goods in inventory are taking a physical count of the goods and keeping a continuous record for each inventory item.
A
True
B
False
2) The unit of measurement concept states that the unit price should be used to record inventory cost when merchandise is purchased.
A
False
B
True
3) An inventory record lists the number of units on hand, the unit price of the item, and the item's total cost.
A
True
B
False
4) At the end of each fiscal period, the cost of merchandise available for sale divided by the ending merchandise inventory equals net purchases for the fiscal period.
A
True
B
False
5) The gross profit method of estimating inventory assumes that a relationship exists between net sales and gross profit.
A
False
B
True
6) If ending inventory is understated, merchandise inventory on the balance sheet will be overstated.
A
False
B
True
7) If the average number of days' sales in merchandise inventory is 40 days, the merchandise inventory turnover ratio (rounded to the nearest 0.1) is 9.1.
A
False
B
True
8) A consignee agrees to care for goods and attempt to sell the goods, but does not count the goods in its inventory.
A
False
B
True
9) A stock record is used in a periodic inventory to record the number of goods purchased, the number of goods sold, and the quantity in inventory.
A
False
B
True
10) Comparing inventory costing methods in times of rising prices, the last-in, first-out method will result in the lowest reported net income.
A
True
B
False
*select an answer for all questions
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