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7. If companies have identical inventoriable costs but use different inventory flow assumptions when the price goods have not been constant, then the A) ending inventory of the companies will be identical. B) net income of the companies will be identical. C) cost of goods available for sale of the companies will be identical. D) cost of goods sold of the companies will be identical. 8. If Vickers Company issues 5,000 shares of $5 par value common stock for'S175,000, A) Paid-In Capital in Excess of Par will be credited for $25,000. B) Cash will be debited for $150,000. C) Common Stock will be credited for $175,000. D) Paid-In Capital in Excess of Par will be credited for $150,000. 9. If the market interest rate is greater than the contractual interest rate, bonds will sell A) at face value. B) at a discount. C) only after the stated interest rate is increased. D) at a premium. 10. A company purchased office equipment for $40,000 and estimated a salvage value of $8,000 at the end of its 5- year useful life. The constant percentage to be applied against book value cach year if the double-declining- balance method is used is A) 5%. B) 20%. C) 25%. D) 40%. 11. A company just starting business made the following four inventory purchases in June: June 150 units $ 390 585 630 June June 10 200 units 15 28 200 units 150 units 510 $2.115 June A physical count of merchandise inventory on June 30 reveals that there are 250 units on hand. The inventory method which results in the highest gross profit for June is A) the LIFO method. B) the weighted average unit cost method. C) not determinable. D) the FIFO method. 12. Cost of goods sold is computed from the following equation: A) beginning inventory + cost of goods purchased - ending inventory. B) beginning inventory- cost of goods purchased + ending inventory. C) sales - cost of goods purchased + beginning inventory-ending inventory. D) sales + gross profit - ending inventory + beginning inventory. 13. In a period of rising prices, the costs allocated to ending inventory may be understated in the A) gross profit method. B) average-cost method. C) LIFO method. D) FIFO method. Page 2

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