Question 1: Whether LIFO costing is applied at the time each sale is made or only at the end of the period, both the periodic and perpetual systems will yield the same ending inventory under LIFO.

• True
• False

Question 2: Trimble Company has 10 delivery trucks that became fully depreciated in the prior year. Justin will continue charging the same amount of depreciation as before so that there will be no decrease in expenses.

• True
• False

Question 3: The key to the classification of an amount as cash is that it be available to pay debts within a three-month period of time.

• True
• False

Question 4: If a company has internal auditors, it doesn't need to have external auditors.

• True
• False

Question 5: Securities issued by corporations as a form of ownership in the business, such as common and preferred stock, are called equity securities.

• True
• False

Question 6: A check written by a company but not yet presented to the bank for payment is called a check in transit.

• True
• False

Question 7: The LIFO conformity rule requires that if a company uses LIFO in reporting income to stockholders, it also must use LIFO on its tax return.

• True
• False

Question 8: Whether investments are reported as current assets or noncurrent assets depends on the company's intent.

• True
• False

Question 9: One of the problems with the use of the allowance method to account for bad debts is that it often violates the matching principle.

• True
• False

Question 10: A good system of internal controls requires that the physical custody of assets be separated from the accounting for those assets. This concept is known as safeguarding assets and records.

• True
• False