There are two basic inventory accounting systems: “Perpetual Inventory System” and “Periodic Inventory System”.

Last-In, First-Out (LIFO) Method Last-in, First-out (LIFO) is just the opposite of FIFO. Under the last-in, first-out (LIFO) method, ending inventory comes from the oldest costs (beginning inventory and earliest purchases) of the period.

The correct answer is E.

The average cost method allocates the cost of goods available for sale on the basis of the weighted average unit cost incurred. The average cost method assumes that goods are similar in nature. When the average cost method is used in a perpetual inventory system, the business computes a new weighted average cost per unit after each purchase. This unit cost is then used to determine the cost of each sale until another purchase is made and a new average is computed. Ending inventory and cost of goods sold are then based on the same average cost per unit. The correct answer is A.

Periodic Inventory System is a system of determining the quantity of inventory on
hand only periodically.

The disclosure principle holds that a company should report enough information for financial statement users to understand methods and procedures used for each component of the financial statements to make wise decisions about the company
by providing additional information.

Th formula to find the solution is : DaystoCollect AccountsReceivable = 365days/
AccountsReceivablesTurnover

Management is responsible for setting up and maintaining internal control in the enterprise. The external auditor may examine internal control but is not responsible for the establishment and maintenance of the entity. The internal auditor is responsible for auditing the activities related to internal control in the enterprise. It can be said that the accountant is responsible for performing the records related to financial transactions in the enterprise. The salesman is responsible for marketing activities in the organization.

Accounts Receivable Turnover Ratio measures the liquidity of accounts receivable and is calculated as net credit sales divided by net accounts receivable.

The correct answer is D. The invoice is the document given by the seller to the customer in return for collection. The service business does not buy products. Trading businesses buy products from suppliers and sell them to customers. Gross profit is the excess of sales revenue over cost of goods sold. 

Inventory Turnover Ratio = Cost of Goods Sold / 
Average Merchandise Inventory

At the end of a period, companies take a physical count of inventories to determine the amount of ending inventories and considering the balances of beginning inventory, total purchases and ending inventory, companies calculate the cost of goods sold during the period. The formula that is used to calculate COGS is: COGS = Beginning Inventory + Purchases – Ending Inventory

Finished Goods Inventory reports the cost of goods, materials and other components of manufacturing process used for the inventory produced and available for sale.

Trade discount is the reduction in the catalogue price or listed price of the goods.

The correct answer is B. Accumulated Depreciation is a contra asset account and it will accumulate the depreciation expense during the useful life of depreciable asset.

A petty cash fund is a fund that contains small cash amounts to use for small expenditures. The correct answer is D.

Internal control is a managerial task and responsibility to ensure that all of the activities of a company are under the management control.

For each transaction, one or more accounts must be debited, or entered on the left side of the account, and one or more accounts must be credited, or entered on the right side of the account, and the total monetary amount of the debits must equal the total dollar amount of the credits. The equality of debits and credits provides the basis for the double-entry system of recording transactions.

The objective of internal control is to provide reasonable assurance that (1) assets are safeguarded and used for business purposes, (2) business information is accurate, and (3) employees comply with laws and regulations.

150 *1.000 TL = 150.000TL (debited Cash and credited Sales Revenue)

Inventory Turnover Ratio measures number of times a company sells average level of merchandise inventory during a period. Companies always try to manage their inventory levels in a way to meet their customer demand on a timely basis without making large investments. Inventory turnover ratio is used to determine how frequently merchandise inventory is sold