Midterm Flashcards
The LIFO method of inventory valuation assumes the oldest inventory is sold first.
False
The FIFO method of inventory valuation assumes the oldest inventory is sold first.
True
The specific Identifaction method of valuing inventory works best for higher priced items, such as cars, that can be readily identified.
True
We would expect that LIFO method of inventory valuation to result in lower cost of goods sold than the FIFO method.
False (higher)
Paper assets, such as stocks and bonds, should be kept in a fire proof box.
True
Employees duties should be regularly rotated as part of internal control
True
Whenever possible, a business should make payments by check.
True
When the petty cash fund is counted and determines to be short, this shortage should be treated as an expense when recorded in the general journal.
True
The petty cash custodian should require a petty cash voucher and a source document prepared/presented prior to payment of petty cash
True
The petty cash fund, because it is considered a small asset, should be readily accessible to all employees
Uh FALSE
The audit of a firm should be performed by an employee of the firm
False, try a manager next time.
The notes of the financial statements are integral part of a firms records and should be closely scrutinized by anyone relying on the contents of the statements
True
An unqualified audit opinion is the most favorable type of opinion an auditor can issue
True
If an auditor is unable to perform the required procedures relating to an audit he or she may issue a disclaimer
True
An adverse opinion is the least favorable of audit opinions
True
