1. When the equity method of accounting for investments is used by the investor, the amortization of additional depreciation due to differences between book values and fair values of investee assets on the date of acquisition:

A. Reduces the investment account and increases investment revenue.

B. Increases the investment account and increases investment revenue.

C. Reduces the investment account and reduces investment revenue.

D. Increases the investment account and reduces investment revenue.

2. In a perpetual average cost system:

A. The average is determined by dividing the total number of units sold by the cost of units purchased during the period.

B. The cost allocated to ending inventory is generally the same as it would be in a periodic inventory system.

C. A new weighted-average unit cost is calculated each time additional units are purchased.

D. The moving-average unit cost is determined following each sale.

3. During periods when costs are rising and inventory quantities are stable, ending inventory will be:

A. Higher under LIFO than FIFO.

B. Lower under average cost than LIFO.

C. Higher under FIFO than LIFO.

D. Higher under average cost than FIFO.

4. Inventory records for Verbal's Chemicals revealed the following:March 1, 2019, inventory: 800 gallons @ $7.00 = $5,600

Purchases:		Sales:
Mar 10	600 gals @$7.25	Mar 5	400 gals
Mar 16	800 gals @$7.30	Mar 14	700 gals
Mar 23	600 gals @$7.35	Mar 20	500 gals
		Mar 26	700 gals

The ending inventory assuming LIFO is:

A. $3,500

B. $3,650

C. $3,675

D. $3,625

5. If Goebel Company acquired a 30% interest in Dobbs Company on December 31, 2018 for $202,500 and during 2019 Dobbs Company had net income of $75,000 and paid a cash dividend of $30,000, applying the equity method would give a debit balance in the Equity Investments account at the end of 2019 of

A. $225,000.00

B. $216,000.00

C. $202,500.00

D. $217,500.00