Inventory Cost Flow

Gross purchases plus beginning inventory are equal to total goods available for sale.

• TRUE

• FALSE

Ending inventory is generally equal to the cost of unsold inventory items.

• TRUE

• FALSE

An entity may choose to its liking any of the following: specific identification, FIFO, and average methods as its cost formula, regardless of the inventory characteristics.

• TRUE

• FALSE

LIFO method is not allowed as a cost formula under PAS 2.

• TRUE

• FALSE

Specific identification shall only be used if the inventory items are ordinary interchangeable.

• TRUE

• FALSE

Under FIFO method, the cost of ending inventory represents the cost of latest inventory purchase.

• TRUE

• FALSE

Under specific identification cost flow, the cost of goods sold is equal to the actual exact cost of sold units.

• TRUE

• FALSE

An entity using FIFO method will arrive at different amounts of ending inventory under periodic or perpetual inventory methods.

• TRUE

• FALSE

An entity using average method will arrive at the same amounts of ending inventory when using periodic or perpetual inventory method.

• TRUE

• FALSE

Under moving average method, multiple averages may be used during a particular period.

• TRUE

• FALSE