Inventory-5

During periods of rising prices, the method that results in the highest net income -
1. FIFO
2. LIFO
3. Average Cost
4. The method does not affect net income
The larger the inventory value -
1. the higher the net income
2. the lower the gross profit
3. the lower the net income
4. the higher the cost of goods sold
The weighted average cost using the periodic system is calculated by -
1. Dividing cost of goods available for sale by the number of units available for sale
2. Dividing cost of goods available for sale by number of units in ending inventory
3. Dividing cost of goods sold by number of units available for sale
4. None of the listed answers is correct
The method that assumes the first goods purchased are the first goods sold is -
1. FIFO
2. LIFO
3. Gross Profit Method
4. Average Cost
The method of costing that assumes the last goods purchased are first goods sold-
1. LIFO Method
2. FIFO Method
3. Perpetual Method
4. Average Cost Method
The method of costing that matches current costs with sales is -
1. LIFO
2. Average Cost
3. FIFO
4. None of the listed methods
During rising prices, the balance sheet amount for inventory is most understated using -
1. LIFO
2. FIFO
3. Average Cost
4. All of the listed answers are correct
During rising prices, the method that minimizes taxes is -
1. LIFO
2. FIFO
3. Average Cost
4. None of the listed answers is correct
An account not normally used with the perpetual inventory system is -
1. Purchases
2. Cost Of Goods Sold
3. Inventory
4. All of the listed answers are used
System that does not update the inventory account for purchases and sales -
1. Periodic System
2. Perpetual System
3. Both Systems Update
4. Neither System Updates
During decreasing prices, what method minimizes taxes ?
1. FIFO
2. LIFO
3. Average Cost
4. The method chosen does not affect taxes
The difference between cost of goods available for sale and cost of goods sold is -
1. Ending Inventory
2. Beginning Inventory
3. Purchases
4. Sales
The inventory method that records purchases using a Purchases Account is -
1. Periodic Inventory Method
2. Perpetual Inventory Method
3. Continuous Inventory Method
4. Specific Inventory Method
Method of costing used with unique and high dollar items is -
1. Specific Identification Method
2. Average Cost Method
3. LIFO Method
4. FIFO Method
Moving average method used with perpetual system calculates new average cost
1. At the time of each purchase
2. At the time of each sale and purchase
3. At the time of each sale
4. At the end of the year
Cost of Goods Sold is not known until an inventory count using what method ?
1. Periodic Inventory System
2. Perpetual Inventory System
3. With both methods the cost of goods sold is always known
4. With both methods the cost of goods sold is not known
Gross Profit is calculated by -
1. Subtracting Cost Of Goods Sold from Net Sales
2. Subtracting Cost of Goods Sold from Owner's Equity
3. Subtracting Liabilities from Assets
4. Subtracting Owner's Equity from Assets
A method used to estimate ending inventory is -
1. Both methods are used to estimate ending inventory
2. Gross Profit Method
3. Retail Inventory Method
4. Neither method is used to estimate ending inventory
An rule used to value inventory that is based on the conservatism principle is -
1. Lower Of Cost or Market Rule
2. Net Realizable Value Rule
3. Market Value Rule
4. None of the listed answers is correct
If the balance of the inventory account always has the beginning balance
1. The periodic inventory method is being used
2. The perpetual inventory method is being used
3. Need more information to determine what method is being used
4. Either method could be being used

Inventory-5

Quiz