Multiple Choice/ True or False

20) As a result of inventory shrinkage: a) equity decreases b) there is no change to equity c) equity increases equity may or may not decrease depending on the inventory valuation method d) used 21) Which of the following statements about gress and for net income is true? a) Net income is usually larger than gross profit b) Net income is the difference between sales and cost of goods sold c) Gross profit is the difference between sales and cost of goods sold d) Gross profit and net income can be found on the balance sheet 22) Which of the following methods for valuing inventory would most likely be used for high value items such as cars and houses? a) Specific Identification b) FIFO c) None of the options d) Weighted Average 23) Unearned revenue is classified as: a) revenue b) a liability c) an expense d) an asset 23) Accrued revenues will always increase a receivable account and decrease a revenue account a) TRUE b) FALSE 24) Adjusted trial balance is the next accounting process after adjustments are made a) TRUE b) FALSE 25) Long-term assets are those that are likely to be converted into cash or used within the next 12 months through the day-to-day operation of the business a) TRUE b) FALSE