1.Which of the following statements is false

A. When prices are constant, the ending inventory value will be the same regardless of the inventory method chosen.B. Under the last-in, first-out method, the cost of goods sold is based on the oldest purchases.C. FIFO costing is consistent with the physical movement of inventory for most companies.D. The specific-unit-cost method is appropriate for items that differ from unit to unit.

2.Assume that Hermione uses perpetual LIFO. The cost of the ending inventory is:

A. $1,700

B. $1,670

C. $1,655

D. $1,600

3.Assume that Hermione uses perpetual average

costing. The average cost of a unit sold on June 22 is:

A. $400

B. $402.50

C. $404

D. $405

4.Assume that Hermione uses perpetual FIFO. The

entry to record the March 1 credit sale at a sale price of $800 per unit would include all of the following

except: A. credit Inventory, $2,400.B. debit Cost of Goods Sold, $1,200.C. debit Accounts Receivable, $2,400.D. credit Sales Revenue, $2,400. 

5.In a period of rising prices, which method will yield the highest net income, lowest inventory cost, and lowest amount of income taxes?

Highest Lowest Lowest

Net income Inventory Income Taxes

A. LIFO LIFO LIFO

B. FIFO LIFO FIFO

C. FIFO LIFO LIFO

D. LIFO FIFO LIFO

6.A company uses FIFO in 20X1 and switches to LIFO in 20X2. Which accounting principle or concept has been violated?

A. The disclosure principle

B. The objectivity principle

C. The time-period concept

D. The consistency principle

7.An understatement of the ending inventory in 20X1 will have the following effects on cost of goods sold and net income in 20X1:

Cost of

Goods Sold Net Income

A. overstate understate

B. overstate overstate

C. understate overstate

D. understate understate