1. When using a perpetual inventory system,

a. no Purchases account is used.

b. a Cost of Goods Sold account is used.

c. two entries are required to record a sale.

d. all of these.

2. Fences and parking lots are reported on the statement of financial position as

a. current assets.

b. land improvements.

c. land.

d. property and equipment.

3. Which of the following is included in inventory costs?

a. Product costs.

b. Period costs.

c. Product and period costs.

d. Neither product or period costs.

4. Which of the following is correct?

a. Selling costs are product costs.

b. Manufacturing overhead costs are product costs.

c. Interest costs for routine inventories are product costs.

d. All of these.

5. Assets that qualify for interest cost capitalization include

a. assets under construction for a company's own use.

b. assets that are ready for their intended use in the earnings of the company.

c. assets that are not currently being used because of excess capacity.

d. all of these assets qualify for interest cost capitalization.

6. Milford Company had 500 units of Tank in its inventory at a cost of $4 each. It purchased, for $2,800, 300 more units of Tank. Milford then sold 400 units at a selling price of $10 each, resulting in a gross profit of $1,600. The cost flow assumption used by Johnson

a. is FIFO.

b. is specific identification.

c. is weighted average.

d. cannot be determined from the information given.

7. The cost of land typically includes the purchase price and all of the following costs except

a. grading, filling, draining, and clearing costs.

b. street lights, sewers, and drainage systems cost.

c. private driveways and parking lots.

d. assumption of any liens or mortgages on the property