accounting true/false?
1. As inventory is sold in many retail businesses, the largest expense
is created.
T/F
2. The ending merchandise inventory for 2007 is the same as the
beginning merchandise inventory for 2008.
T/F
3. The buyer will include the sales tax as part of the cost of
merchandise purchased.
T/F
4. In a multi-step income statement the dollar amount for income from
operations is always the same as net income.
T/F
5. In many retail businesses, inventory is the largest current asset.
T/F
6. A business using the perpetual inventory system, with its detailed
subsidiary records, does not need to take a physical inventory.
T/F
7. If the perpetual inventory system is used and a physical count
disclosed a shortage, the cost of merchandise sold should be
debited and the merchandise inventory account credited.
T/F
8. The use of the lower-of-cost-or-market method of inventory valuation
increases net income for the period in which the inventory
replacement price declined.
T/F
9. During inflationary periods, the use of the FIFO method of costing
inventory will yield an inventory amount for the balance sheet
approximating the current replacement cost.
T/F
10. 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.
T/F
11. One negative effect of carrying too much inventory is risk that
customers will change their buying habits.
T/F
12. Other income and expenses are items that are not related to the
primary operating activity.
T/F
13. If ending inventory for the year is understated, net income for the
year is overstated.
T/F
14. Transportation-in is considered a cost of purchasing inventory.
T/F
15. The selection of an inventory costing method has no significant
impact on the financial statements.
T/F