Question : 31.Which of the following not considered an acceptable inventory cost : 1237678

 

 

31.Which of the following is not considered an acceptable inventory cost method according to GAAP?   

A. First-in, first-out.

 

B. First-in, last-out.

 

C. Last-in, first-out.

 

D. Average cost.

 

 

 

 

32.When prices are increasing, which inventory method will produce the highest cost of goods sold?   

A. FIFO.

 

B. LIFO.

 

C. Average cost.

 

D. Cost of goods sold will not change.

 

 

 

 

33.Kent Company has used the same inventory method for many years. This is an example of which principle?   

A. Matching.

 

B. Realization.

 

C. Cost.

 

D. Consistency.

 

 

 

 

34.In which of these inventory approaches is it important to determine the actual cost of a particular inventory item being sold in order to determine cost of goods sold?   

A. LIFO.

 

B. FIFO.

 

C. Specific identification.

 

D. Weighted average cost.

 

 

 

 

35.In a perpetual inventory system, two entries are normally made to record each sales transaction. The purpose of these entries is best described as follows:   

A. One entry recognizes the sales revenue and the other recognizes the cost of goods sold.

 

B. One entry records the purchase of merchandise and the other records the sale.

 

C. One entry records the cost of goods sold and the other reduces the balance in the Inventory account.

 

D. One entry updates the subsidiary ledger and the other updates the general ledger.

 

 

 

 

36.Which of the four inventory approaches is best suited to inventories of high-priced, low-volume items?   

A. LIFO.

 

B. FIFO.

 

C. Average cost.

 

D. Specific identification.

 

 

 

 

37.In a perpetual inventory system, an inventory cost flow assumption is used primarily for determining which costs to use in:   

A. Recording purchases of inventory.

 

B. Recording the cost of goods sold.

 

C. Recording sales revenue.

 

D. Forecasts of future operating results.

 

 

 

 

38.Which of the four inventory approaches transfers the most recent purchase cost to the cost of goods sold and the remaining items in inventory are valued at the oldest acquisition costs?   

A. LIFO.

 

B. FIFO.

 

C. Average.

 

D. Specific identification.

 

 

 

 

39.Harris Corporation’s inventory of a particular product includes 200 units purchased at a per-unit cost of $50, and another 100 units purchased at a unit cost of $60. If Harris sells 10 units of this product, the cost of goods sold will be:   

A. $500.

 

B. $550.

 

C. $660.

 

D. The answer will depend upon the inventory cost flow assumption in use.

 

 

 

 

40.During periods of inflation, when comparing LIFO with FIFO:   

A. LIFO inventory and cost of sales would be higher.

 

B. LIFO inventory and cost of sales would be lower.

 

C. LIFO inventory would be lower and cost of sales would be higher.

 

D. LIFO inventory would be higher and cost of sales would be lower.