ASSESS YOUR PROGRESS Review Questions - Which principle states that businesses should use the same accounting methods and procedures from period to period? 2. What does the disclosure principle require? Discuss the materiality concept. Is the dollar amount that is material the same for a company that has annual sales of $10,000 compared with a company that has annual sales of $1,000,000 4. What is the goal of conservatism? 5. Discuss some measures that should be taken to maintain control over merchandise inventory. 6. Under a perpetual inventory system, what are the four inventory costing methods and how does each method determine ending merchandise inventory and cost of goods sold 7. When using a perpetual inventory system and the weighted average inventory cost- ing method, when does the business compute a new weighted average cost per unit? 8. During periods of rising costs, which inventory costing method produces the highest gross profit? 9. What does the lower-of-cost-or-market (LCM) rule require? 10. What account is debited when recording the adjusting entry to write down merchandise inventory under the LCM rule? 11. What is the effect on cost of goods sold, gross profit, and net income if ending merchandise inventory is understated? 12. When does an inventory error cancel out, and why? 13. How is inventory turnover calculated, and what does it measure? 14. How is days' sales in inventory calculated, and what does it measure? 151. When using the periodic inventory system, which inventory costing method(s) always produces the same result as when using the perpetual inventory system 16A. When using the periodic inventory system and weighted average inventory costing method, when is the weighted-average cost per unit computed