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Inventory Valuation Methods Quiz

Authored by rizak aden

Business

University

Used 1+ times

Inventory Valuation Methods Quiz
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20 questions

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1.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Which method assumes that the oldest inventory items are sold first?

FIFO

LIFO

Weighted Average

Specific Identification

2.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Under which inventory method would the cost of goods sold (COGS) be highest during a period of rising prices?

FIFO

LIFO

Weighted Average

Specific Identification

3.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Which method would result in a higher ending inventory value during deflation?

FIFO

LIFO

Weighted Average

Specific Identification

4.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

If a company uses FIFO, what effect does this have on net income during inflation?

Increases net income

Decreases net income

No effect on net income

Depends on other factors

5.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Under LIFO, which inventory layer is used to calculate the cost of goods sold?

The most recent purchases

The oldest purchases

The average cost of all inventory

The specific identification of items sold

6.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Which of the following is true about the FIFO method in terms of tax implications during a period of rising prices?

FIFO generally results in higher taxable income.

FIFO generally results in lower taxable income.

FIFO has no impact on taxable income.

FIFO results in tax savings in all conditions.

7.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

When using the LIFO method, which of the following financial statements will be most affected during inflation?

Balance Sheet

Statement of Cash Flows

Income Statement

Statement of Changes in Equity

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