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L6: Inventory costing method

Authored by Diana Wang

Business, Professional Development, Mathematics

12th Grade - University

Used 12+ times

L6: Inventory costing method
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6 questions

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1.

MULTIPLE CHOICE QUESTION

1 min • 5 pts

 In a period of rising prices, which methods will yield the higher net income and lower ending inventory cost?

WA, WA

FIFO    FIFO

FIFO, WA

WA    FIFO

2.

MULTIPLE CHOICE QUESTION

1 min • 5 pts

An overstatement of the ending inventory in 2014 will have the following effects on cost of goods sold and net income in 2014:

overstated, understated

overstated, overstated

understated,   understated

understated    overstated

3.

MULTIPLE CHOICE QUESTION

1 min • 5 pts

Which of the following states that businesses should use the same accounting methods and procedures from period to period?

Accounting conservatism

Consistency characteristic

Disclosure principle

Materiality concept

4.

MULTIPLE CHOICE QUESTION

1 min • 5 pts

Floormart uses a perpetual inventory system. By year end, inventory that cost $26,000 can only be sold for $24,000. The journal entry required, if any, will include a

debit to Cost of Goods Sold for $2,000.

debit to Inventory for $24,000.

debit to Inventory for $2,000.

No journal entry is required.

5.

MULTIPLE CHOICE QUESTION

1 min • 1 pt

When inventory prices are rising, the FIFO method will generally yield a gross margin that is:

less than the weighted average method.

equal to the gross margin of the weighted-average method.

higher than the weighted-average method.

FIFO does not generally cause a gross margin that is different from that of any other costing method.

6.

MULTIPLE CHOICE QUESTION

1 min • 1 pt

January 1 inventory balance 100 units at $10 per unit

March 2 purchase 50 units at $11 per unit

July 8 purchase 80 units at $10 per unit

November 15 purchase 30 units at $12 per unit

On December 31, a physical count reveals 80 units in ending inventory.

Assuming all goods are sold throughout the year for $17 per unit, gross margin calculated under the periodic FIFO method would be:

$1,210.

$1,260.

$1,150.

$900.

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