Accounting True or False Question

The higher the inventory turnover, the lower the average days inventory on hand.

Question 1 options:

	1) True
	2) False

Inventory methods such as FIFO and LIFO deal more with flow of costs than with flow of goods.

Question 2 options:

	1) True
	2) False

An overstatement of ending inventory in a particular period will result in an overstatement of gross margin in that period. (Hint: write out the COGS formula and the Gross Profit formula. You will need them later anyway)

Question 3 options:

	1) True
	2) False

In periods of rising inventory prices, the LIFO inventory method will result in a higher inventory valuation than will the average-cost method.

Question 4 options:

	1) True
	2) False

If a company uses LIFO for tax purposes, it must also use LIFO for financial reporting purposes.

Question 5 options:

	1) True
	2) False

Depreciation refers to the periodic allocation of the cost of a tangible long-lived asset over tis estimated useful life.

Question 11 options:

	1) True
	2) False

Intangible assets are subject to a process called depreciation.

Question 12 options:

	1) True
	2) False

The cost of land would include the cost of a building purchased with the land and torn down because it was not needed.

Question 13 options:

	1) True
	2) False

Residual value is not relevant when calculating double-declining-balance depreciation.

Question 14 options:

	1) True
	2) False

Natural resources are classified as intangible assets on the balance sheet.

Question 15 options:

	1) True
	2) False

Deplete natural resources, amortize equipment and depreciate patents.

Question 16 options:

	1) True
	2) False

Because failure to record a liability generally leads to failure to record an expense, it usually results in an overstatement of income.

Question 24 options:

	1) True
	2) False

If any portion of a long-term debt is to be paid in the next year, the entire debt should be classified as a current liability.

Question 25 options:

	1) True
	2) False

The federal and state unemployment tax rates are identical.

Question 26 options:

	1) True
	2) False

If the amount of a liability cannot be exactly determined, it should not be recorded anyway.

Question 27 options:

	1) True
	2) False

Discount on Notes Payable is associated with promissory notes where the interest is deducted from the proceeds of the loan at the very beginning.

Question 28 options:

	1) True
	2) False