Learning Obiectivs Chs-P2 The eonservatism principle: 15. A) Requires that when more than one estimate of amounts to be received or paid in the future are equally hkely, then the less optimistic amount should be used B) Requires that a company use the same accounting methods period after period C) Requires that revenues and expenses be reported in the period in which they are earned or incurred. D) Requires that all items of a material nature be included in financial statements E) Requires that all inventory items be reported at full cost. : Ch5-C1, Al, PI, P2 16. Match each of the following terms with the appropriate definition 1. Specific identification method 2. Days' sales in inventory 4. Inventory turnover 5. Consistency principle 6. Lower of cost or market 7. Net realizable value 8. LIFO method 9. Weighted average inventory methocd 10, FIFO method A. The accounting principle that aims to select the less optimistic estimate when two or more estimates are about equally B. The expected sales price of an item minus the cost of making the sale. C. The accounting principle that a company use the same accounting methods period after period so that the financial D. An estimate of days needed to convert the inventory at the end of the period into receivables or cash. E. An inventory pricing method that assumes the unit prices of the beginning inventory and of each purchase are weighted F. The required method of reporting inventory at market when market is lower than cost. G. An inventory valuation method that assumes costs for the most recent items purchased are sold first and charged to cost H. An inventory valuation method where the purchase cost of each item in ending inventory is identified and used to I. An inventory valuation method that assumes that inventory items are sold in the order acquired. ikely. statements of succeeding periods will be comparable. by the number of units of each in inventory; the cakculation occurs at the time of each sale. of goods sold. determine the cost assigned to inventory The number of times a company's average inventory is sold during a period. J. Ch6-C1 A good system of internal control: A) Urges adherence to prescribed managerial policies. B) Insures profitable operations. C) Eliminates the need for an audit. D) Requires the use of non-computerized systems E) Is not necessary if the company uses a computerized system. 17. Ch6-Cl 18. When two clerks share the same cash register it is a violation of which internal control principle? A) Establish responsibilities. B) Maintain adequate records. C) Insure assets D) Bond key employees E) Apply technological controls Ch6-Cl Pre-mumbered printed checks are an example of which internal control principle? A) Technological controls. B) Maintain adequate records. 19. C) Perform regular and independent reviews. ish responsibilities