1.

Swing Ltd uses FIFO for its inventory, which is valued at $21,000. It is considering a change to moving weighted average, which would change the valuation of inventory to $22,500. Which of the following would be decreased by the change?

a.

Cost of goods sold

b.

Sales

c.

Liabilities

d.

Withdrawals

2.

Which of the following is NOT an accounting method that could be chosen by a company to increase reported profits in a particular year?

a.

Understating allowance for doubtful debts

b.

Classifying longer-term receivables as current assets

c.

Changing estimates of the useful life of plant and equipment

d.

Changing inventory valuation method

3.

Which of the following statements about the use of the FIFO assumption is NOT true?

a.

The FIFO assumption assigns the more recent purchase costs to the balance sheet inventory asset account.

b.

The FIFO assumption is not affected by the inventory control method.

c.

In periods of rising prices it produces a higher profit than LIFO.

d.

The FIFO assumption produces inventory asset values that are based on older purchase costs.

Which income statement account(s) would be affected by a policy choice at the same time as the inventory balance sheet account.

a.

Bad debts expense

b.

Cost of goods sold expense

c.

Depreciation or amortisation expense

d.

Sales revenue

Clear my choice