1. If a company has a number of days sales in inventory equal to 60 that means that it takes about two months on average to sell its inventory.

a. True b. False

2. Moving average is the name given to the use of an average cost method used with a periodic inventory system.

a. True b. False

3. The inventory turnover ratio is defined as cost of goods sold divided by average inventory.

a. True b. False

4. Changing inventory methods to take advantage of the tax breaks offered by LIFO is not a valid reason for a change in methods

. a. True b. False

5. Specific identification relies on matching unit costs with the actual units sold.

a. True b. False

6. The inventory method that assigns the most recent costs to ending inventory is LIFO.

a. True b. False

7. With the periodic inventory system, the inventory account is updated after each sale or purchase

. a. True b. False

8. Bad Debts expense is increased and Accounts Receivable is decreased at the end of the period to recognize bad debts under the allowance method.

a. True b. False 7

9. The use of the allowance method is an attempt by accountants to match bad debts as an expense with the revenue of the period in which a sale on credit takes place

. a. True b. False

10. Under the allowance method of accounting for bad debts, the company estimates the amount of bad debts before those debts actually occur.

a. True b. False

11. An aging schedule typically categorizes the various accounts by the length of time each invoice is outstanding.

a. True b. False

12. Twin Cities Corp. had sales during the year of $15,000,000 and an average accounts receivable of $5,000,000. Its accounts receivable turnover ratio is 0.33 times. a. True b. False

13. The maker of a note recognizes a note receivable on the balance sheet and interest revenue on its income statement.

a. True b. False

14. Depreciation does not describe the increase or decrease in the market value of the asset.

a. True b. False

15. A change in estimate of an assets residual value involves restating the income statements of past periods for the estimate change.

a. True b. False