Multiple Choice

(1). A perpetual inventory system

(a). only knows the inventory on hand at the end of the year physical count

(b). keeps a continuous record of the physical quantities in its inventory

(c). does not maintain a continuous record of the physical quantities of inventory on hand

(d). does not maintain a continuous record of the cost of inventory on hand

(2). For valuation of inventory, the lower of cost or market rule may be applied to

(a). the total inventory

(b). each item or the total of inventory

(c). each item, the total of inventory, or major categories of inventory

(d). each item

(3). Property, plant, and equipment are listed on the balance sheet at

(a). expected future value

(b). fair value

(c). cost

(d). cost less accumulated depreciation

(4). Which depreciation method ignores residual value when computing the depreciable base of an asset?

(a). sum-of-the-years'-digits method

(b). double-declining-balance method

(c). Straight line method

(d). Activity based method

(5). Intangible assets are initially recorded at

(a). cost

(b). expected future value

(c). expected present value of expected cash flows

(d). present fair value