Adv. Accounting Ch. 6 Review Question Preview (ID: 11708)


INVENTORY! TEACHERS: click here for quick copy question ID numbers.

Most businesses have a merchandise inventory turnover ratio close to 12, since they offer terms on n/30 to their customers
a) True
b) False
c)
d)

The cost of items in inventory involves both the price paid to vendors for the merchandise and the costs involved in getting the goods to the place of business and ready for sale
a) True
b) False
c)
d)

To use the retail method of estamating inventory, the cost of purchase, sales and beginning merchandise inventory must be known. The retail price of items sold must also be known.
a) True
b) False
c)
d)

The cost of merchandise avaliable for sale consists of beginning merchandise inventory and net purchases
a) True
b) False
c)
d)

Each year, the business uses the inventiry costing method that results in the most favorable net income
a) True
b) False
c)
d)

To prepare monthly interim financial statements, a business should take the inventory monthly
a) True
b) False
c)
d)

If ending inventory is overstated, net income will be overstated
a) True
b) False
c)
d)

The consignor is the owner of the goods on consignment and is responsible for selling the goods
a) True
b) False
c)
d)

If ending inventory is overstated, the cost of merchandise sold will be understated
a) True
b) False
c)
d)

A low merchandise inventory turnover ratio usually indicates a high return on investment
a) True
b) False
c)
d)

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