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Accounting Principle Final Exam -------------------------------------------------

Date :December 5, 2011
Exam consists three part with 100 points
Part I T/F – Please read the question careful and answer T for True and F for False
1.If the unit price of inventory is increasing during a period, a company using the LIFO inventory method will show less gross profit for the period, than if it had used the FIFO inventory method.
2.Under a perpetual inventory system, the cost of goods sold is determined each time a sale occurs.
3.A periodic inventory system does not require a detailed record of inventory items.
4.Control over cash disbursements is improved if major expenditures are paid by check.
5.A manufacturer’s inventory consists of raw materials, work in process, and finished goods.
6.Non-operating activities include revenues and expenses that are related to the company’s main line of operations.
7. In periods of falling prices, FIFO will result in a larger net income than the LIFO method. 8.Sales revenues, cost of goods sold, and gross profit are amounts on a merchandising company's income statement not commonly found on the income statement of a service company.
9. If the unit price of inventory is increasing during a period, a company using the LIFO inventory method will show less gross profit for the period, than if it had used the FIFO inventory method.
10.The average cost inventory method relies on a simple average calculation.)
11. A bank reconciliation is generally prepared by the bank and sent to the depositor along with canceled checks.
12.If a monthly cash budget is prepared properly, there will never be a cash deficiency at the end of any
month.