1. Which of the following should be included in the physical inventory of a company?

a. Goods held on consignment from another company.

b. Goods in transit to another company shipped FOB shipping point.
c. Goods in transit from another company shipped FOB shipping point.
d. Both b and c above.
2. For companies that use a perpetual inventory system, all of the following are purposes for
taking a physical inventory except:
a. to check the accuracy of the records.
b. to determine the amount of wasted raw materials.
c. to determine losses due to employee theft.
d. to determine ownership of the goods.
3. Under a consignment arrangement, the
a. consignor has ownership until goods are sold to a customer.
b. consignor has ownership until goods are shipped to the consignee.
c. consignee has ownership when the goods are in the consignee's possession.
d. consigned goods are included in the inventory of the consignee.
4. Gross profit methods of estimating inventory relies on the following assumptions except
a. Beginning inventory plus purchases equal total goods to be accounted for.
b. Goods not sold must be on hand.
c. The sales, reduced to cost, deducted from the sum of the opening inventory plus
purchases, equal ending inventory.
d. None of the above
5. Understating beginning inventory will understate

a. assets. c. net income.

b. cost of goods sold. d. owner's equity.

6. Overstating ending inventory will overstate all of the following except

a. assets. c. net income.

b. cost of goods sold. d. owner's equity.

7. Which of the following is correct about the objectives of general-purpose financial reporting?
a. Provide financial reporting information to a wide variety of users.
b. Provide the most useful information possible at the least cost.
c. Investors are considered the primary user group.
d. Helps investors assess the amounts, timing and uncertainty of prospective cash inflows.
e. All of the above
8. An independent organization (s) whose mission is to develop, a single set of high quality,
understandable and international financial reporting standards (IFRSs) for general purpose
financial statements

a. FASB e. All of the above

b. IASB
c. SEC
d. IOSCO