ACCT 504 Week 4, Midterm Exam 5 - 1 Transactions that affect inventories on hand have an effect on both the balance sheet and the income statement A

ACCT 504 Week 4, Midterm Exam 5 - 1 Transactions that...

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1. Transactions that affect inventories on hand have an effect on both the balance sheet and the income statement.A) TrueB) False2. The matching principle requires that the cost of goods sold be matched against the ending merchandise inventory in order to determine income.3. A company may use more than one inventory costing method concurrently.4. An error that overstates the ending inventory will also cause net income for the period to be overstated.5. Under the FIFO method, the costs of the earliest units purchased are the first charged to cost ofgoods sold.A) TrueB) False6. The gross profit method is based on the assumption that the rate of gross profit remains constant from one year to the next. 7. In a manufacturing business, inventory that is ready for sale is called8. An employee assigned to counting computer monitors in boxes should9. A recommended internal control procedure for taking physical inventories is that the counting should be done by employees who do not have custodial responsibility for the inventory. This is an example of what type of internal control procedure?A) Establishment of responsibilityB) Documentation procedure
C) Independent internal verificationD) Segregation of duties10. The term "FOB" denotes11. Cost of goods sold is computed from the following equation:

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