Exhibit 7-4 RJ, Inc

question 27

Multiple Choice

Exhibit 7-4 RJ, Inc. had the following activity for an inventory item during June:
-Refer to Exhibit 7-4. Assuming RJ, Inc. uses a periodic weighted average cost flow assumption, ending inventory for June would be

• A) $512
• B) $560
• C) $768
• D) $720

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Definitions:

Assets

Resources owned by a business from which future economic benefits are expected to flow to the enterprise.

Equity

The value of an ownership interest in property or a business, calculated as total assets minus total liabilities; represents what the owners' claim on the assets is.

Entity Assumption

The accounting principle that treats a business as a separate legal and accounting entity, distinct from its owners, managers, or operators.

Historical Cost Principle

An accounting principle that assets should be recorded and reported at their original purchase cost.