Hap Owns and Operates a Small Business with Only Four

question 99

Multiple Choice

Hap owns and operates a small business with only four full time employees and less than $500 thousand in annual sales.He currently uses a manual accounting system and relies on a part-time bookkeeper to keep his records in order.In evaluating the possible adoption of a computerized accounting system,Hap will probably discover that:

• A)a computerized system would be affordable,but that he would have little need for it unless his company grew and became significantly larger.
• B)he would be better off hiring a full time accountant.
• C)he could benefit greatly from adopting such a system,but should also consult with an accountant for advice.
• D)the expense of setting up a computerized accounting system would be beyond his financial ability at this time.

Apply the lower of cost or market rule to inventory valuation.

Analyze the effect of internal control measures on inventory management and reporting.

Understand the treatment of consignment goods, goods in transit, and returns on inventory counts and financial reporting.

Understand the principles of inventory costing methods (e.g., FIFO, LIFO, average cost, and specific identification).

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Definitions:

Restrictive Employment Contract

A contract between an employer and employee that limits the latter's actions both during and after the period of employment, often including clauses like non-compete, non-disclosure, and non-solicitation.

Patent And Trademark Office

An agency of the U.S. Department of Commerce responsible for granting patents for inventions and registering trademarks.

Federal Law

Legislation that has been enacted by the national government and applies throughout the country.

Service Mark

A type of trademark used to identify and distinguish the services (rather than goods) provided by one entity from those of others.