1. Unlike the periodic inventory system, the perpetual inventory system:
a. does not require a physical count of the ending inventory
b. includes only the inventory purchased for cash
c. provides a continuous record of inventory on hand
d. is not required by GAAP
2. Deciding on which inventory method a company should use affects:
a. the profite to be reported
b. the income taxes to be paid
c. the values of ratios reported from the balance sheet
d. all of the above
3. Treating a capital expenditure as an immediate expense:
a. overstates assets and overstates owners' equity
b. overtates expense and understates net income
c. understates expense and overstates owners' equity
d. understates expenses and understates assets
a. does not require a physical count of the ending inventory
b. includes only the inventory purchased for cash
c. provides a continuous record of inventory on hand
d. is not required by GAAP
2. Deciding on which inventory method a company should use affects:
a. the profite to be reported
b. the income taxes to be paid
c. the values of ratios reported from the balance sheet
d. all of the above
3. Treating a capital expenditure as an immediate expense:
a. overstates assets and overstates owners' equity
b. overtates expense and understates net income
c. understates expense and overstates owners' equity
d. understates expenses and understates assets