MCQ Questions
Q.1.
Physical inventory counts:
  • 0%
    are included in inventory at their net realizable value.
  • 0%
    cost of goods sold to be understated and net income to be overstated.
  • 0%
    requires that when a change in inventory valuation method is made, the notes to the financial statements report the type of change, why it was made, and its effect on net income.
  • 0%
    are necessary to measure and adjust for inventory shrinkage.
Q.2.
The full disclosure principle:
  • 0%
    cost of goods sold to be understated and net income to be overstated.
  • 0%
    requires that when a change in inventory valuation method is made, the notes to the financial statements report the type of change, why it was made, and its effect on net income.
  • 0%
    are included in inventory at their net realizable value.
  • 0%
    are necessary to measure and adjust for inventory shrinkage.
Q.3.
The understatement of the beginning inventory balance causes:
  • 0%
    LIFO method.
  • 0%
    are necessary to measure and adjust for inventory shrinkage.
  • 0%
    cost of goods sold to be understated and net income to be overstated.
  • 0%
    lower of cost or market.
Q.4.
In applying the lower of cost or market method to inventory valuation, market is defined as:
  • 0%
    specific identification method.
  • 0%
    lower of cost or market.
  • 0%
    LIFO method.
  • 0%
    current replacement cost.
Q.5.
Which inventory valuation method assigns a value to the inventory on the balance sheet that approximates current cost and also mimics the actual flow of goods for most businesses?
  • 0%
    lower of cost or market.
  • 0%
    LIFO method.
  • 0%
    specific identification method.
  • 0%
    FIFO
Q.6.
Generally accepted accounting principles require that the inventory of a company be reported at:
  • 0%
    cost of goods sold to be understated and net income to be overstated.
  • 0%
    lower of cost or market.
  • 0%
    current replacement cost.
  • 0%
    LIFO method.
Q.7.
During a period of steadily rising costs, the inventory valuation method that yields the lowest reported net income is:
  • 0%
    FIFO
  • 0%
    current replacement cost.
  • 0%
    lower of cost or market.
  • 0%
    LIFO method.