Reference no: EM132887515

Problem 1: Goods in transit are included in inventory:

B. When the purchaser is responsible for paying freight charges.

C. When the supplier pays the freight charges.

D. When ownership has passed to the purchaser.

E. When the purchaser is responsible for paying freight charges and when ownership has passed to the purchaser.

Problem 2: Costs included in the value of inventory are:

A. Purchase price less discounts.

B. Transportation-in.

C. Storage.

D. Insurance.

E. All of these answers are correct.

Problem 3: The pricing of an inventory where the purchase invoice of each item in the ending inventory is identified and used to determine the cost assigned to the inventory is:

A. Weighted-average inventory method.

B. First-in, first-out method.

C. Average costing method.

D. Specific identification method.

E. Retail method.

Problem 4: The consistency principle:

A. Requires a company to use the same accounting methods period after period.

B. Requires a company to use one cost flow assumption exclusively.

C. Allows a company to change its cost flow assumption period after period in order to maximize net income.

D. Is also called the matching principle.

E. Allows a company to change its cost flow assumption period after period in order to minimize income taxes.