Reference no: EM133296012
1. A perpetual inventory system is most often used when:
Inventory has a small number of items with relatively high value
Inventory has a small number of items with relatively low value
Inventory has a large number of items with relatively high value
Inventory has a large number of items with relatively low value
2. A periodic inventory system is most often used when:
Inventory has a large number of items with relatively high value
Inventory has a small number of items with relatively high value
Inventory has a small number of items with relatively low value
Inventory has a large number of items with relatively low value
3. The perpetual method of accounting for inventory:
Is not as helpful as a periodic method in providing management with timely reports about inventory quantities and costs
Is likely to be less expensive to maintain than a periodic inventory method
Allows management to better estimate inventory losses from pilferage than does a periodic inventory method
Requires that a physical count of inventory be taken before the cost of goods sold can be determined with any reasonable degree of accuracy
4. If a company sold merchandise for a profit, the accounting equation would show a(n):
Net increase in assets and decrease in liabilities
Net decrease in assets and increase in revenues
Net increase in assets and increase in revenues
Increase in liabilities and increase in revenues
5. With a periodic inventory system, inventory-related data can be used to compute an estimate of what ending inventory should be before an ending inventory count is made. What is the correct calculation of this estimate of ending inventory?
Cost of goods sold plus purchases
Cost of goods sold plus cost of goods available for sale
Cost of goods sold minus beginning inventory
Purchases plus beginning inventory
Cost of goods available for sale minus cost of goods sold
Cost of goods available for sale plus purchases
6. For external reporting purposes, inventory shrinkage is usually combined with which account?
Operating expenses
Gross profit
Cost of goods sold
Merchandise inventory
7. A physical count would be necessary at the end of the accounting period under which inventory system?
Both periodic and perpetual inventory systems
Neither periodic nor perpetual inventory systems
Perpetual inventory system
Periodic inventory system
8. Under which inventory system would a company NOT be able to specifically determine the amount of inventory lost or stolen?
Neither periodic nor perpetual inventory systems
Periodic inventory system
Both periodic and perpetual inventory systems
Perpetual inventory system
9. If expenses are overstated on the income statement, net income:
Will be unaffected
Will be understated
Will be overstated
Cannot be determined from the information given
10. If the ending inventory is overstated, net income for the same period will be:
Unaffected
Understated
Overstated
Cannot be determined from the information given