6 Interactive Quiz A

6 Interactive Quiz A - Interactive Quiz A Home > Chapter 6...

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Interactive Quiz A http://highered.mcgraw-hill.com/sites/0072996536/student_view0/chapter6/interactive_quiz_a.html[6/22/2010 6:40:45 PM] Interactive Quiz A (See related pages) Results Reporter Out of 25 questions, you answered 3 correctly with a final grade of 12% 3 correct (12%) 22 incorrect (88%) 0 unanswered (0%) Your Results: The correct answer for each question is indicated by a . INCORRECT When the moving average method of perpetual inventory tracking is used, at what point is the new average cost calculated? A) Only at the end of the year B) After each sale of the given inventory item C) After each new purchase of the same inventory item D) Both B and C E) None of the above Feedback: The new moving average inventory cost per unit is calculated after each new purchase of a given inventory item. INCORRECT Even though the amount of Cost of Goods Sold and the amount of ending Inventory can vary dramatically depending on which inventory cost flow assumption is used, which one of the following numbers will always be the same regardless of which inventory cost flow assumption is used? A) The amount of the beginning inventory. B) The amount of the ending inventory. C) The amount of computed gross profit. D) The Cost of Goods Available for Sale amount. E) None of the above Feedback: The amount of inventory cost flowing into the firm during a given time period is the same total amount regardless of which inventory cost flow assumption is used. Although the total Cost of Goods Available for Sale amount will always be the same, the portion of this total that is allocated to Cost of Goods Sold and to the ending Inventory will differ depending on the cost flow assumption that is used. INCORRECT When the cost of buying an item of inventory from a supplier is steadily increasing or steadily decreasing, it is possible to make some generalizations as to what will be the effects on Cost of Goods Sold given the use of any particular cost flow assumption. In periods of rising purchase prices which of the following statements is true? A) LIFO will assign lower inventory costs to cost of goods sold than will FIFO and LIFO will assign lower inventory costs to the ending inventory than will FIFO. B) LIFO will assign lower inventory costs to cost of goods sold than will FIFO and LIFO will assign higher inventory costs to the ending inventory than will FIFO. C) LIFO will assign higher inventory costs to cost of goods sold than will FIFO and LIFO will assign lower inventory costs to the ending inventory than will FIFO. D) LIFO will assign higher inventory costs to cost of goods sold than will FIFO and LIFO will assign higher inventory costs to the ending inventory than will FIFO. E) None of the above is true. Feedback: If inventory purchase prices are increasing, costs of goods sold will be higher using LIFO because the most recent prices are the ones being assigned to cost of goods sold. Thus, the older and lower inventory costs are the ones being assigned to the ending inventory.
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This note was uploaded on 08/01/2010 for the course ACC 101 taught by Professor Layvand during the Spring '09 term at Thomas Edison State.

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6 Interactive Quiz A - Interactive Quiz A Home > Chapter 6...

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