#1.

Sam's Fresh Fish is a national chain of fish markets. Which of the following statement is true regarding the inventory cost methods that are acceptable under the Generally Accepted Accounting Principles (GAAP)?

A) Generally accepted accounting principles allow Sam's to use any GAAP method, regardless of the physical flow of the fish.

B) The First-in-First-Out method must be used because GAAP requires Sams to match the physical flow of the inventory with the cost flow assumptions.

C) The Last-in-Last-Out method must be used to avoid health-related issues with the fish.

D) The Average Cost method must be used to account for different availability of certain fish in certain locations

#2.. Which of the following is not a characteristic of a liability?

a)It represents a probable, future sacrifice of economic benefits.

b) It must be payable in cash.

c) It arises from present obligations to other entities.

d)It results from past transactions or events.

e)None of the above are characteristics of liabilities.

#3. . At times, businesses require advance payments from customers that will be applied to the purchase price when goods are delivered or services provided. These customer advances represent:

a) Liabilities until the product or service is provided.

b) A component of shareholders' equity.

c) Long-term assets until the product or service is provided.

d)Revenue upon receipt of the advance payment.

E) Expenses until the product or service is provided.

#4. A loss contingency should be accrued on a company's financial statements only if the likelihood that a liability has been incurred is:

a) At least remotely possible and the amount of the loss is known.

b) At least reasonably possible and the amount of the loss is known.

d) At least reasonably possible and the amount of the loss can be reasonably estimated.

e) Probable and the amount of the loss can be reasonably estimated.

f) 100% likelihood that the liability has been incurred and the amount is known

#5.

6. Which of the following statements is correct?

a)We dont need to accrue warranty expense for sales occurred in the current period.

b)Warranty reserve account is a contra-asset account

c)Warranty reserve is one of the account that managers can use to do cookie jar reserve to smooth income take more reserve in a good year and less reserve in a bad year.

d) Every time we need to pay warranty expense, we directly debit warranty expense and credit cash or accounts payable.

#6.

7. Which of the following is true about IFRS inventory accounting?

a) LIFO is allowed under IFRS

b) IFRS use lower of cost or market as valuation basis for inventory

c) Replacement cost can be the market value under IFRS

d) Lower of cost or market can be implemented at inventory line level

#8.

When inventory purchase price go down, which of the following inventory methods will lead to the lowest inventory balance?

a) LIFO

b) FIFO

c) both will be the same

d) Average cost