T2_Sol - Name (please print) Multiple Choice Points Problem...

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Test 2 Spring 2009 Page 1 Name (please print) Multiple Choice Points Problem Points Total Points Financial Accounting for MBAs EGADE Test 2 - Solutions Spring 2009 Notes: 1. If you believe the information presented is inconsistent or incomplete make a note of any assumptions or corrections you made in your test booklet and continue to solve the problem. 2. Please note your answers in the space provided. Partial credit on problems can only be earned when you should your calculations. 3. I hope you do great!
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Test 2 Spring 2009 Page 2 Multiple Choice (40 points 2 points each) - Identify the letter of the choice that best completes the statement or answers the question. Only one answer per question, circle your answer. __ 1. During a year of rising prices and increasing inventory, which cost flow assumption would measure the smallest net income? a. LIFO b. FIFO c. Averaging d. All methods measure income the same. __ 2. When accounting for inventory consignments, the issue which helps determine whether or not the inventory cost should be included on a company’s balan ce sheet is a. whether the inventory is physically located in the company’s warehouse. b. who actually owns title to the inventory. c. who will ultimately sell the inventory to the consumer. d. when the inventory will be sold. __ 3. Selecting an inventory cost flow assumption will most likely be impacted by which one of the following? a. The physical flow of the inventory goods b. The cost of the company’s plant and equipment c. Income taxes d. The cost flow assumptions most often used by other companies __ 4. The LIFO conformity rule requires a company that uses a. the LIFO assumption for computing cost of goods sold on its tax return to also use the LIFO assumption in preparing its financial statements. b. any inventory cost assumption to use the LIFO cost assumption for tax purposes. c. the LIFO assumption for computing cost of goods sold on its financial statements to also use LIFO on its tax return. d. the LIFO assumption to avoid paying taxes on inventory profits. __ 5. Under the lower-of-cost-or-market rule, market is a. the selling price of inventory items. b. the original cost paid for inventory. c. used to value inventory if it is less than its recorded cost. d. the amount of cash the company expects to collect from the sale of an inventory item __ 6. Tiger Corp. purchased available-for-sale securities from Mud Hen Company on December 23 for $3,000. On December 31, the market value of those securities is $3,500. Which one of the following is appropriate on December 31? a. Available-for-Sale Securities 3,500 Unrealized Gain on Available-for-Sale Securities 3,500 b. Available-for-Sale Securities 500 Unrealized Gain on Available-for-Sale Securities 500 c. Available-for-Sale Securities 500 Unrealized Price Increase on Available-for-Sale Securities 500 d. No entry is required.
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Test 2 Spring 2009 Page 3 __ 7. Trading securities of Lug Nuts Inc. were purchased by Blue Jay Company on December 14 for
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This note was uploaded on 10/18/2011 for the course EOSC 118 taught by Professor Daveturner during the Spring '10 term at The University of British Columbia.

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T2_Sol - Name (please print) Multiple Choice Points Problem...

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