Questions 6-9

Multiple Choice Indicate the correct response with a letter in the space provided Which of the following steps in the purchasing cycle requires a journal entry? A receiving report is recorded A purchase order is placed Materials received are transferred to the storeroom A disbursement voucher is received Materials are issued from the storeroom upon presentation of which document? Purchase requisition Material requisition Bill of materials Materials ledger card At the end of the accounting period, the total of the balances on the materials ledger cards should equal the balance in the general ledger account for Raw Materials Inventory Work in Process Inventory Vouchers Payable Manufacturing Overhead Control Which of the following is not a principle of internal control for storing and issuing materials? Restricted access to the storeroom Each material stored in a specified place Only one person authorized to handle the storage and issuance of materials Materials ledger cards maintained for ad items in the materials inventory The Florida Coast Company uses 100 pounds of Material X per day It takes 12 days to receive an order For Material X If Florida Coast wants a safety stock level of 200 pounds, what is the reorder point? 200 pounds 1, 200 pounds 1, 400 pounds 2, 500 pounds Which of the following is a cost of placing a purchase order? Cost of maintaining inventory records Costs associated with maintaining the receiving department Cost of insurance to cover materials Costs associated with obsolescence, theft and spoilage of materials Which of the following is a principle of internal control over purchases? The person who places the order should be the person responsible for unpacking and counting the materials In order to take advantage of all purchase discounts, purchase invoices should be paid when received even if an materials have not yet been delivered. All requests for materials should be signed by an authorized person. Purchase orders should be assigned the same number as the corresponding purchase requisition. In a period of rising prices, which inventory costing method will produce the lowest net income? FIFO LIFO Average None of the above Which inventory costing method minimizes the influence of wide fluctuation in the purchase price of materials? FIFO LIFO Average None of the above