True 40 average inventory is computed by adding the

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Accounting
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Chapter 7 / Exercise 4
Accounting
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TRUE 40. Average inventory is computed by adding the inventory at the beginning of the period to the inventory at the end of the period and dividing by two. TRUE 41. Inventory turnover measures the length of time is takes to acquire, sell and replace the inventory. FALSE 42. In the retail inventory method, the cost to retail ratio is equal to the cost of goods sold divided by the retail price of the good sold. FALSE 43. Use of the retail inventory method requires taking a physical count of inventory. FALSE 44. If a fire destroys the merchandise inventory, the gross profit method can be used to estimate the cost of merchandise destroyed. TRUE
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Accounting
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Chapter 7 / Exercise 4
Accounting
Reeve/Warren
Expert Verified
45. If a company uses the periodic inventory system to cost its inventory, the gross profit method is a method that can be used to check on theft when the actual inventory is taken by the company. TRUE 46. Match the following documents used for inventory control:1. last document in the chain, use to compare all three for accuracy Vendor’s Invoice 12. establishes an initial record of the receipt of inventory Purchase Order 33. authorizes the purchase of inventory from an approved vendor Receiving Report 247. Match the following cost flow assumption to their inventory costing method:1. Cost flow matches the unit sold to the unit purchased. Average Cost 32. Cost flow is in the reverse order in which the cost were incurred. Last-in, Last-out (LIFO) 23. Cost flow is an average of the costs. Specific Identification 14. Cost flow is in the order in which the costs were incurred. First-in, First-out (FIFO) 448. Under a perpetual inventory system, the amount of each type of merchandise on hand is available in the A. customer's ledger B. creditor's ledger C.inventory ledger D. purchase ledger 49. Taking a physical count of inventory A. is not necessary when a periodic inventory system is used B.should be done near year-end C. has no internal control relevance D. is not necessary when a perpetual inventory system is used 50. Control of inventory should begin as soon as the inventory is received. Which of the following internal control steps is notdone to meet this goal? A. check the invoice to the receiving report B. check the invoice to the purchase order C.check the invoice with the person who specifically purchased the item D. check the invoice extensions and totals
51. Which of the following is notan example for safeguarding inventory? A. Storing inventory in restricted areas. B. Physical devices such as two-way mirrors, cameras, and alarms. C. Matching receiving documents, purchase orders, and vendor’s invoice. D.Returning inventory that is defective or broken. 52. Which of the following methods is appropriate for a business whose inventory consists of a relatively small number of unique, high-cost items?

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