Multiple Choice Answers

Of the three widely used inventory costing methods (fifo, lifo, and average), the lifo method of costing inventory is based on the assumption that costs are charged against revenues in the order in which they were incurred.

True
False
Stock issued at a price that is greater than par is said to be issued at a discount.

True
False

The use of the lower of cost or market method of inventory valuation increases the gross profit for the period in which the inventory replacement price declined.

True
False

In a job order cost accounting system used by a service business, which of the following items would normally not be included as part of overhead?

a. Materials
b. Direct labor
c. Rent
d. Supplies

An analysis in which all the components of an income statement are expressed as a percentage of net sales is called:

a. vertical analysis
b. horizontal analysis
c. liquidity analysis
d. common-size analysis