ACCT 2100 Chap 4 Practice Quiz
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?
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
Which of the following would produce the lowest net income in an inflationary environment?
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
LO: LO 1
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?
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