21) The disclosure principle states that a company should disclose all major accounting methods and procedures in the:
A) balance sheet.
B) income statement.
C) footnotes to the financial statements.
D) adjusted trial balance.
22) The materiality concept states that a company must:
A) report only such information that enhances the financial position of the company.
B) perform strictly proper accounting only for significant items.
C) report enough information for outsiders to make knowledgeable decisions about the company.
D) use the same accounting methods and procedures from period to period.
23) Which of the following statements is true of a good merchandise inventory control system?
A) It minimizes the authorization of purchase of merchandise.
B) It ensures that a physical count of inventory is not required.
C) It often prevents the company from a stockout.
D) It minimizes the authorization of sale of merchandise.
24) The tracking of inventory shrinkage due to theft, damage, or errors is done with the help of ________ of inventory.
A) authorization
B) sale
C) physical count
D) delivery
Learning Objective 6-2
1) Ending inventory is calculated by multiplying the number of units on hand with the unit cost.
2) Ending inventory equals the cost of goods available for sale less beginning inventory.
3) Under the last-in, first-out (LIFO) method, the cost of goods sold is based on the oldest purchases.
4) When a company uses the first-in, first-out (FIFO) method the cost of goods sold correlates to the most recently purchased goods and the value of ending inventory correlates to the oldest goods in stock.
5) When a company uses the last-in, first-out (LIFO) method, the cost of goods sold correlates to the most recently purchased goods, and the ending inventory correlates to the oldest goods in stock.
6) The specific identification method of inventory costing is recommended when a business deals in un
