This exercise tests your understanding of the four inventory methods. List the name of the inventory method that best fits the description. Assume that the cost of inventory is rising.
1. _______Generally associated with saving income taxes.
2. _______ Results in a cost of ending inventory that is close to the current cost of replacing the inventory.
3. _______Used to account for automobiles, jewelry, and art objects.
4. _______Provides a middle-ground measure of ending inventory and cost of goods sold.
5. _______Maximizes reported income.
6. _______Matches the most current cost of goods sold against sales revenue.
7. _______Results in an old measure of the cost of ending inventory.
8. _______Writes inventory down when replacement cost drops below historical cost.
9. _______Enables a company to buy high-cost inventory at year end and thereby decrease reported income and income tax.
10. _______Enables a company to keep reported income from dropping lower by liquidating older layers of inventory.