1Under the average cost method, the flow of costs through the accounting records will A be nearly the opposite of the physical flow of goods through the business B closely match the physical flow of goods through the business C exactly match the physical flow of goods through the business D have no relationship to the physical flow of goods through the business 2) Under the FIFO method, the physical flow of goods through the business will A have no relationship to the flow of costs through the accounting records B closely match the flow of costs through the accounting records C exactly match the flow of costs through the accounting records D be nearly the opposite of the flow of costs through the accounting records 3 Given the following inventory activity, what is ending inventory using the perpetual LIFO costing method Date Quantity Unit Cost Beginning Balance 100 $5 00 September 17 Purchase 50 $3 50 September 24 Sale 25 September 29 Purchases 40 $6 A 75 units $5 00 and 50 units $3 50 and 40 units $6 00 B 100 units $5 00 and 25 units $3 50 and 40 units $6 00 C 125 units $4 50 and 40 units $6 00 D 165 units $4 86 4 A drawback to using when inventory costs are rising is that the company reports lower net income A specificminusidentification costing B average costing C FIFO D LIFO If the ending inventory in Period 1 is understated, gross profit for Year 1 is A understated B not affected C overstated D determined by beginning inventory The last step in using the gross profit method to estimate ending inventory is to A estimate the beginning inventory B estimate the cost of goods sold C calculate the cost of goods available for sale D estimate the ending inventory

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Question: 1Under the average cost method, the flow of costs through the accounting records will: A.be nearly the opposite of the physical flow of goods through

1Under the average cost method, the flow of costs through the accounting records will:

A.be nearly the opposite of the physical flow of goods through the business.

B.closely match the physical flow of goods through the business.

C.exactly match the physical flow of goods through the business.

D.have no relationship to the physical flow of goods through the business.

Under the FIFO method, the physical flow of goods through the business will:

A.have no relationship to the flow of costs through the accounting records.

B.closely match the flow of costs through the accounting records.

C.exactly match the flow of costs through the accounting records.

D.be nearly the opposite of the flow of costs through the accounting records

Given the following inventory activity, what is ending inventory using the perpetual LIFO costing method?

Date		Quantity	Unit Cost
Beginning Balance		100	$5.00
September 17	Purchase	50	$3.50
September 24	Sale	25
September 29	Purchases	40	$6

75 units @ $5.00 and 50 units @ $3.50 and 40 units @ $6.00

100 units @ $5.00 and 25 units @ $3.50 and 40 units @ $6.00

125 units @ $4.50 and 40 units @ $6.00

165 units @ $4.86

A drawback to using ________ when inventory costs are rising is that the company reports lower net income.

specificminusidentification

costing

average costing

FIFO

LIFO

If the ending inventory in Period 1 is understated, gross profit for Year 1 is:

understated.

not affected.

overstated.

determined by beginning inventory.

The last step in using the gross profit method to estimate ending inventory is to:

estimate the beginning inventory.

estimate the cost of goods sold.

calculate the cost of goods available for sale.

estimate the ending inventory.

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