ACCT 2100 Chap 4 Practice Quiz

ACCT 2100 Chap 4 Practice Quiz - ACCT 2100 Chap 4 Practice...

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ACCT 2100 Chap 4 Practice Quiz CORRECT Mickey's Luxury Auto Emporium, Inc. sells fine, luxurious automobiles that are priced above  $75,000. What method of inventory cost flow would be appropriate for Mickey's? A) FIFO B) Weighted Average C) LIFO D) Specific Identification Feedback:  Specific Identification is frequently used for high priced, low turnover items. When a company's inventory  consists of many low priced, high turnover goods, the record keeping necessary to use specific  identification is not practical.  LO: LO 1 CORRECT Which of the following would produce the lowest net income in an inflationary environment? A) LIFO B) Weighted Average C) FIFO D) Specific Identification Feedback:  The LIFO method values Cost of Goods Sold as though the items sold were the last to be purchased. This  artificially increases Cost of Goods Sold, and lowers Gross Profit. This, therefore, results in a lower level of  net Income.  LO: LO 1 CORRECT Izcomdar Toys, Inc. exhibits the following information for 2009: a. Beginning Inventory, 1/1  80 units @ $20 b. Purchase, 1/20  60 units @ $22 c. Purchase, 2/27 100 units @ $25 d. Purchase, 5/22  400 units @ $30 e. Purchase, 7/21 150 units @ $35 f. Purchase, 9/15 100 units @ $40 The company sold, during the year, 800 units for $50 each. What would the value of inventory on  hand be, assuming the FIFO method is used? A) $1,820 B) $3,600 C) $2,697 D) $2,545 Feedback:  The FIFO method values the cost of items sold during the period as though they were the oldest items in  stock. This will leave 90 items in stock at the end of the period. These items (90) are valued at $40 each, or 
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$3,600. 
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This note was uploaded on 02/05/2012 for the course ACCT 2100 taught by Professor Smith during the Spring '08 term at Kennesaw.

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ACCT 2100 Chap 4 Practice Quiz - ACCT 2100 Chap 4 Practice...

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