Concerning purchase discounts, which one of the following statements is true?

a.

The net price method results in recording accounts payable at the maximum value of the liability that the company may be required to pay out.

b.

An advantage of the gross price method is that it isolates purchase discounts lost and thus highlights inefficiencies.

c.

Purchase discounts taken should be deducted from the acquisition cost of the inventory.

d.

Purchase discounts lost should be included in the cost of inventory.

2.

The Purchases Discounts Taken account may appear in the accounting records if which one of the following methods is used to account for purchase discounts?

	a.	gross price method
	b.	sales price method
	c.	allowance method
	d.	net price method

Which one of the following types of costs is excluded from the cost of inventory that is routinely manufactured?

	a.	interest
	b.	normal spoilage
	c.	insurance
	d.	raw materials

Which one of the following statements is true?

a.

FOB shipping point means the buyer acquires legal title to the goods when they reach the buyer's place of business.

b.

FOB destination means the seller has legal title to the goods until they reach the buyer's place of business.

c.

FOB shipping point means the seller has legal title to the goods while they are in transit.

d.

FOB destination means the buyer has legal title to the goods while they are in transit.

The basic criterion for including items in inventory is

	a.	physical possession
	b.	economic control
	c.	legal ownership
	d.	physical control

Which of the following inventory cost flow assumptions produces the same ending inventory values under both the periodic and perpetual systems?

	a.	weighted average
	b.	FIFO
	c.	dollar-value LIFO
	d.	LIFO

The cost of goods sold model for a manufacturer is:

Beginning Finished Goods Inventory

+

Purchases (net)

=

Cost of Goods Available for Sale

-

Ending Finished Goods Inventory

=

Cost of Goods Sold

True

False