The Accounting Principle That Requires an Accounting Information System to Report

question 117

Multiple Choice

The accounting principle that requires an accounting information system to report useful,understandable,timely and pertinent information for effective decision-making is the:

• A)Control principle
• B)Compatibility principle
• C)Relevance principle
• D)Flexibility principle
• E)Cost-Benefit principle

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Definitions:

Merchandise Purchases

The acquisition of goods for resale at a profit, a central activity of retail and wholesale businesses.

Lower of Average Cost or Market

An inventory valuation method where inventory is valued at either its average cost or market value, whichever is lower.

Cost-to-retail Percentage

A ratio used in inventory valuation that compares the cost of inventory to its retail price.

Freight-in Charges

Costs associated with transporting goods from the supplier to the buyer's location.