Inventory Valuation Quiz

What method assumes that the oldest inventory is sold first?

• Specific Identification

• First in First out (FIFO)

• Last in First out (LIFO)

• Weighted Average Cost

What is the inventory value using the FIFO method for 2 units at $12.50 each?

• $22

• $30

• $25

• $20

How is the weighted average cost calculated?

• Total inventory value divided by total sales

• Total sales divided by total purchases

• Total cost of inventory divided by total units available

• Total cost of goods sold divided by total units sold

In a periodic inventory system, when is the cost of goods sold determined?

• Continuously

• At the end of the accounting period

• At the time of purchase

• At the time of sale

What is the average cost per unit using the simple average method for $10 and $15?

• $11.75

• $12.00

• $11.25

• $12.50

Which method requires recalculating the average price each time a purchase is made?

• AVCO

• FIFO

• LIFO

• Specific Identification

What is a disadvantage of using the FIFO method?

• It is complex to use

• It may lead to higher taxes in rising price environments

• It undervalues closing inventory

• It does not comply with accounting standards

Which inventory valuation method is generally realistic as materials are sold in order?

• Weighted Average Cost

• Last in First out (LIFO)

• First in First out (FIFO)

• Specific Identification

Which inventory valuation method is not allowed in accounting standard IFRS?

• Weighted Average Cost

• Last in First out (LIFO)

• First in First out (FIFO)

• Specific Identification

What is the cost of goods sold if 100 units are sold at a weighted average cost of $12.86?

• $1286

• $1200

• $1300

• $1400