Test Bank For Fundamental Accounting Principles| Latest Update Complete Questions And 100% Verified Correct Answers

Test Bank For Fundamental Accounting
Principles| Latest Update Complete Questions
And 100% Verified Correct Answers



TEST BANK
Why would the physical count of inventory be different than what is shown in perpetual
inventory records? - CORRECT ANSWERS--Events such as errors

-Events such as theft

-Events such as loss

-Events such as damage

The kind of business that would use the specific identification method of inventory
costing includes: - CORRECT ANSWERS-A car dealership

The _____ principle states that inventory costs are expensed as cost of goods sold
when inventory is sold. - CORRECT ANSWERS-expense recognition

Which statement(s) below correctly describe(s) the relationship of cost of goods sold
and ending inventory? - CORRECT ANSWERS--Cost of goods available for sale must
be allocated between cost of goods sold and ending inventory.

-Cost of goods sold plus ending inventory will equal the total goods available for sale.

Show your understanding of the ownership of goods in transit by completing the
following statement.

If goods are shipped FOB shipping point, then the __________ is responsible for paying
freight charges and the __________ will not include the merchandise in their inventory.
- CORRECT ANSWERS--Purchaser

-Seller

, One identical unit is purchased on each of the following three dates and at the
respective costs: June 1 at $10 June 2 at $15 July 4 at $20 The company sells two units
during the period. Conclude which inventory items are sold first and which unit remains
in ending inventory if the company is using the FIFO cost flow assumption. - CORRECT
ANSWERS-The June 1 at $10 and the June 2 at $15 are both sold; the July 4 unit
remains in ending inventory.

Which of the following lists the four methods used to assign costs to inventory and to
cost of goods sold? - CORRECT ANSWERS-FIFO, LIFO, weighted average and
specific Identification

Which statement(s) below is(are) correct regarding the purpose of taking a physical
inventory count? - CORRECT ANSWERS--The physical count is used to determine if
there has been any theft, loss, damage or errors in inventory.

Sometimes companies must estimate ending inventory. Review the reasons given
below for estimating inventory and choose all of the correct responses. - CORRECT
ANSWERS--The store was flooded.

-Fire destroyed the inventory warehouse.

-Interim financial statements need to be prepared.

Which of the statements below explain why LCM is used? - CORRECT ANSWERS--
LCM allows companies to recognize a loss in value of an asset in the period the loss
occurs.

-Accounting principles require conservatism when reporting financial information.

-Companies never want to report inventory on a balance sheet that is higher than
replacement cost.

-Assets are not shown at an inflated value on the balance sheet, but rather at lower of
cost or replacement cost.

Which of the following statements is correct regarding goods in transit? - CORRECT
ANSWERS-Goods shipped FOB shipping point will be included in the buyer's inventory.

Identify the safeguards that companies implement to protect their inventory. -
CORRECT ANSWERS-Restrict access to inventory.Match inventory received with
purchase orders.Implement security measures, such as cameras.Control access to
inventory records.

The FIFO cost flow assumption assumes that the cost of items purchased __________
are the costs that will be transferred first to cost of goods sold on the __________. -
CORRECT ANSWERS--Earliest