ACCT 212 Week 4 Quiz (Updated)

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ACCT 212 Week 4 Quiz (Updated)


Question 1.Question :(TCO 4) For a merchandising company
Student Answer: the balance sheet reports the cost of the inventory that was on hand at the beginning of the period.
 the income statement reports the cost of the inventory sold during the period.
 ending inventory can be an asset or an expense.
 inventory is generally not a significant factor in their operations.


Question 2.Question :(TCO 4) Two accounts that would appear on the financial statements of a merchandising company that are not needed by a service company are
Student Answer: cost of goods sold and depreciation.
 cost of goods sold and net income.
 cost of goods sold and inventory.
 inventory and depreciation.


Question 3.Question :(TCO 4) The inventory system that uses computer software to keep a running record of inventory on hand is the
Student Answer: cost of goods sold inventory system.
 periodic inventory system.
 perpetual inventory system.
 hybrid inventory system.


Question 4.Question :(TCO 4) All of the following costs would be included in inventory except for
Student Answer: freight-in.
 taxes paid on the purchase price.
 insurance while in transit.

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Question 5.Question :(TCO 4) If the cost to purchase a unit of inventory does not change, ending inventory
Student Answer: will be the highest under FIFO.
 will be the highest under LIFO.
 cannot be computed using the average-cost method.
 will be the same under LIFO and FIFO.


Question 6.Question :(TCO 4) To determine cost of goods sold under the FIFO method
Student Answer: the first costs into inventory are the first costs assigned to cost of goods sold.
 the last costs into inventory are the first costs assigned to cost of goods sold.
 the average cost of the inventory must be determined.
 the company must first determine the specific units sold.


Question 7.Question :(TCO 4) Under the _____ method, ending inventory is based on the costs of the most recent purchases.
Student Answer: average-cost


Question 8.Question :(TCO 4) The disclosure principle states that a company should report _____ and _____ information about itself.
Student Answer: material, relevant
 important, conservative
 representational faithful, financial
 relevant, representational faithful


Question 9.Question :(TCO 4) The lower-of-cost-or-market rule requires a company to report inventories at the lower of
Student Answer: historical cost or current sales price.
 historical cost or current replacement cost.
 current replacement cost or sales invoice price.
 FIFO cost or LIFO cost.


Question 10.Question :(TCO 4) The inventory turnover ratio
Student Answer: is determined by dividing cost of goods sold by net sales.
 shows how many times the company sold its average level of inventory.
 should be high for a company that sells high-priced inventory items.
 will be lower for companies that have many low-priced items in their inventory .




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