Where People Think That No One Is Watching, They Will

question 48

Multiple Choice

Where people think that no one is watching, they will often shirk their responsibilities. This is known as

• A) moral hazard.
• B) conservative accounting.
• C) adverse selection.
• D) an inefficient marketplace.

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Definitions:

FIFO Method

The First-In, First-Out method, an inventory valuation strategy where goods first added to inventory are the first ones to be sold.

Weighted-Average Method

An inventory costing method that calculates the cost of ending inventory and the cost of goods sold based on the average cost of all units available for sale during the period.

Equivalent Units

A concept in cost accounting that converts partially completed goods into a number of completed units for inventory valuation.

Materials

Raw inputs or supplies that are converted into finished products through the manufacturing process.