Chapter 6 Review

Which principle or concept states that businesses should use the same accounting methods and procedures from period to period?

• Disclosure

• Conservatism

• Consistency

• Materiality

Which inventory costing method assigns to ending merchandise inventory the newest - most recent - costs incurred during the period

• FIFO

• Weighted Average

• Specific Identification

• LIFO

Assume Nile began April with 14 units of inventory that cost a total of $266. During April, Nile purchased and sold goods shown. Under FIFO, how much is Nile's COGS for the sale on April 14?

• $1,106

• $686

• $1,400

• $700

Suppose Nile used the weighted average inventory method. Nile began April with 14 units of inventory that cost $266 and made the purchases shown. Compute the weighted average cost of the inventory on hand at April 8. Round to the nearest cent.

• $21.00

• $19.50

• $19.75

• Cannot be determined

Which inventory costing method results in the lowest net income during a period of rising inventory costs?

• Weighted Average

• Specific Identification

• FIFO

• LIFO

Which of the following is most closely linked to accounting conservatism?

• Lower of Cost or Market Rule

• Materiality Concept

• Disclosure Principle

• Consistency

At December 31, 2016, Stevenson Company overstated ending inventory by $36,000. How does this error affect cost of goods sold and net income for 2016?

• Overstates cost of goods sold and understates net income

• Understates cost of goods sold and overstates net income

• Leaves both cost of goods sold and net income correct because the errors cancel

  each other

• Overstates both cost of goods sold and net income

Suppose Maestro’s had cost of goods sold during the year of $230,000. Beginning

merchandise inventory was $35,000, and ending merchandise inventory was $45,000. Determine Maestro’s inventory turnover for the year. Round to the nearest hundredth.

• 6.57 times per year

• 5.75 times per year

• 5.11 times per year

• 17.39 times per year

Which of the following is not considered an acceptable inventory cost method according to GAAP? 

• First-in, first-out

• First-in, last-out

• Last-in, first-out

• Weighted average cost

Kent Company has used the same inventory method for many years. This is an example of which principle? 

• Matching

• Cost

• Revenue Realization

• Consistency