Inventory

When prices are increasing, which inventory method will produce the highest cost of goods sold? 

• FIFO.
• LIFO.
• Average cost.
• Cost of goods sold will not change.

Which of the four inventory approaches is best suited to inventories of high-priced, low-volume items? 

• LIFO.
• .  FIFO.
• Average cost.
• Specific identification.

Which of the four inventory approaches transfers the most recent purchase cost to the cost of goods sold and the remaining items in inventory are valued at the oldest acquisition costs? 

• LIFO.
• FIFO.
• Average cost.
• Specific identification.

During periods of inflation, when comparing LIFO with FIFO: 

• LIFO inventory and cost of sales would be higher.
• LIFO inventory and cost of sales would be lower.
• LIFO inventory would be lower and cost of sales would be higher.
• .  LIFO inventory would be higher and cost of sales would be lower.

During periods of inflation, which method will yield the smallest ending inventory and the largest cost of goods sold? 

• LIFO.
• FIFO.
• .  Average cost.
• Specific identification.

For the purpose of delaying income taxes, during an inflationary period, which method would be best? 

• LIFO.
• FIFO.
• Average cost.
• Taxes would be the same under each assumption.

At the end of last year, Games-2-Use had merchandise costing $140,000 in inventory. During January of the current year, the company purchased merchandise costing $102,000, and sold merchandise that it had purchased at a total cost of $84,000. Games-2-Use uses a perpetual inventory system. The total amount debited to the Inventory account during January was: 

• 0
• 84000
• 102000
• 140000

At the end of last year, Games-2-Use had merchandise costing $140,000 in inventory. During January of the current year, the company purchased merchandise costing $102,000, and sold merchandise that it had purchased at a total cost of $84,000. Games-2-Use uses a perpetual inventory system.The balance in the Inventory account at January 31 was:

• 84000
• 140000
• 158000
• 242000

At the end of last year, Games-2-Use had merchandise costing $140,000 in inventory. During January of the current year, the company purchased merchandise costing $102,000, and sold merchandise that it had purchased at a total cost of $84,000. Games-2-Use uses a perpetual inventory system.The amount of goods transferred from the Inventory account to the Cost of Goods Sold account during January was: 

• 0
• 84000
• 102000
• 56000

Castle TV, Inc. purchased 1,000 monitors on January 5 at a per-unit cost of $185, and another 1,000 units on January 31 at a per-unit cost of $230. In the period from February 1 through year-end, the company sold 1,800 units of this product. At year-end, 200 units remained in inventory. Assume that Castle TV, Inc. uses the FIFO flow assumption. The cost of the 200 units in inventory at year-end is: 

• 41500
• 46000
• 37000
• 83000