A perpetual inventory system eliminates the need for periodically taking a physical inventory. True False

A perpetual inventory system eliminates the need for periodically taking a physical inventory.

	True
	False

Answer
False

During periods of inflation, the LIFO cost flow assumption will yield a lower inventory value than FIFO. True False

During periods of inflation, the LIFO cost flow assumption will yield a lower inventory value than FIFO.

	True
	False

Answer
True

The inventory turnover rate is equal to the average inventory divided by the cost of goods sold. True False

The inventory turnover rate is equal to the average inventory divided by the cost of goods sold.

	True
	False

Answer
False

Merchandise sold F.O.B. destination belongs to the buyer while in transit. True False

Merchandise sold F.O.B. destination belongs to the buyer while in transit.

	True
	False

Answer
False

An advantage to the LIFO method of accounting for inventory is that it values the cost of goods sold at current replacement costs. True False

An advantage to the LIFO method of accounting for inventory is that it values the cost of goods sold at current replacement costs.

	True
	False

Answer
True

An advantage to the LIFO method of accounting for inventory is that it values the cost of goods sold at current replacement costs. True False

An advantage to the LIFO method of accounting for inventory is that it values the cost of goods sold at current replacement costs.

	True
	False

Answer
True

An advantage of the average cost method of accounting for inventory is that the inventory is valued in the balance sheet at current replacement costs. True False

An advantage of the average cost method of accounting for inventory is that the inventory is valued in the balance sheet at current replacement costs.

	True
	False

Answer
False

When goods for sale are not homogeneous in nature, it is not necessary to use the specific identification method of accounting for inventory. True False

When goods for sale are not homogeneous in nature, it is not necessary to use the specific identification method of accounting for inventory.

	True
	False

Answer
True

When the direct write-off method is used to recognize uncollectible accounts expense, an Allowance for Doubtful Accounts is not required. True False

When the direct write-off method is used to recognize uncollectible accounts expense, an Allowance for Doubtful Accounts is not required.

	True
	False

Answer
True

In order to be classified as available-for-sale securities, the investment cannot be held for a period longer than three months. True False

In order to be classified as available-for-sale securities, the investment cannot be held for a period longer than three months.

	True
	False

Answer
False

If the allowance method is used and an account receivable that had been previously written-off is collected, income is currently recorded. True False

If the allowance method is used and an account receivable that had been previously written-off is collected, income is currently recorded.

	True
	False

Answer
Flase

A compensating balance is often required by a bank as a condition for granting a loan. True False

A compensating balance is often required by a bank as a condition for granting a loan.

	True
	False

Answer
True

Cash equivalents include money market funds, U.S. Treasury bills, and high-grade commercial paper. True False

Cash equivalents include money market funds, U.S. Treasury bills, and high-grade commercial paper.

	True
	False

Answer
TRue

The balance shown on a bank statement is always less than the month-end balance of a company's cash account in the general ledger. True False

The balance shown on a bank statement is always less than the month-end balance of a company's cash account in the general ledger.

	True
	False

Answer
Flase

Deposits-in-transit would not appear on a company's bank reconciliation but would appear on the company's bank statement. True False

Deposits-in-transit would not appear on a company's bank reconciliation but would appear on the company's bank statement.

	True
	False

Answer
False

Cost of goods sold for 2010 $1,900,000 Inventory, December 31, 2009 445,000 Inventory, December 31, 2010 485,000 rev: 03- What is the inventory turnover for 2010? (Round your answer to two decimal places.) rev: 03-02-2011 2.00 3.92 → 4.09 4.27 Explanation Inventory Turnover = Cost of goods sold / Average inventory Inventory Turnover = $1,900.000/ [(445,000+485,000)/2] = 4.09 Days to sell for 2010 is: (Use 365 days in a year. Do not round intermediate calculations. Round your final answer to 2 decimal places.) rev: 03-02-2011 182.50 → 89.33 85.48 93.2 Explanation Days to sell = 365 / Inventory turnover 89.33 = 365 / 4.09

Cost of goods sold for 2010	$1,900,000
Inventory, December 31, 2009	445,000
Inventory, December 31, 2010	485,000

 
rev: 03- 

What is the inventory turnover for 2010? (Round your answer to two decimal places.)

 
rev: 03-02-2011

	2.00
	3.92
→	4.09
	4.27

Explanation Inventory Turnover = Cost of goods sold / Average inventory

Inventory Turnover = $1,900.000/ [(445,000+485,000)/2] = 4.09

Days to sell for 2010 is: (Use 365 days in a year. Do not round intermediate calculations. Round your final answer to 2 decimal places.)

 
rev: 03-02-2011

	182.50
→	89.33
	85.48
	93.2

Explanation Days to sell = 365 / Inventory turnover

89.33 = 365 / 4.09

The adjusted trial balance combines the trial balance items with the adjusting entries to determine the adjusted balances. True False

The adjusted trial balance combines the trial balance items with the adjusting entries to determine the adjusted balances.

	True
	False

Answer
True