• MULTIPLE CHOICE.  Highlight one alternative that best completes the statement or answers the question.

  
  

  
  

  1) For perishable and identical inventory items, ______ inventory cost method will be used

  A) Average cost method.

  B) Specific identification method.

  C) Standard cost method.

  D) First-in, First-out method.

  
  

  2) Who is the owner of the inventory and will report inventory when inventory is shipped on a consignment basis

  A) retailer.

  B) buyer.

  C) manufacturer.

  D) insurance company.

  
  

  3) Average unit cost under _______ method is computed each time new purchase is made?

  A) Specific identification method.

  B) Moving weighted average cost method.

  C) First-in, First-out method.

  D) Last-in, First-out method.

  
  

  4) If ending inventory is understated on a Balance Sheet, balances for total assets and owner’s equity will be 

  A) understated and understated.

  B) understated and overstated.

  C) overstated and overstated.

  D) overstated and understated.

  
  

  5) One of the objectives of internal control is _______?

  A) To comply with applicable laws and regulations.

  B) To safeguard and use assets solely for business purposes.

  C) To produce reliable and accurate financial reports.

  D) All of the above are correct.

  
  

  6) Which of the following is the best example of a control procedure? 

  A) External audit

  B) Employee training

  C) Fraud detection

  D) Mandatory vacations