Adv. Accounting - Ch. 6 Review: Question Preview (ID: 11707)


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A file of stock records for all merchandise on hand is called a(n)
a) accounts payable ledger b) stock ledger c) merchandise ledger d) inventory record
The period of time needed to sell an average amount of merchandise inventory is called the
a) average number of days' sales in merchandise inventory b) average sales turnover ratio c) merchandise inventory turnover ratio d) merchandise sold ratio
The person or business that receives goods on consignment is called the
a) consignment buyer b) consignee c) consignor d) owner
If an inventory is taken once each year, the business must be using the perpetual inventory method
a) True b) False c) d)
If ending inventory is understated, retained earnings will be overstated
a) True b) False c) d)
A perpetual inventory maintains a continuous record of merchandise inventory increases and decreases
a) True b) False c) d)
When using the lower of cost or market, compare the cost of inventory using your normal costing method to the current replacement cost. The inventory's valued at whichever is lower
a) True b) False c) d)
A business may fail if it does not have enough inventory on hand, but will not fail if it has an excess of inventory
a) True b) False c) d)
Comparing inventory costing methods in times of rising prices, the first-in, first-out method will result in the highest cost of merchandise sold
a) True b) False c) d)
FOB shipping point means that the title to the goods passes to the buyer when the vendor delivers the goods at the buyer's place of business.
a) True b) False c) d)
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