Connect - Chapter 7: Inventory and CGS
Which inventory costing method uses the oldest cost for CGS on the income statement and the newest cost for Inventory on the balance sheet?
FIFO
Which financial statements are needed to calculate the inventory turnover ratio?
Income statement and balance sheet
Which inventory costing method uses the newest cost for Cost of Goods sold on the income statement and the oldest cost for inventory on the balance statement?
LIFO
The weighted average cost method uses the weighted average cost to calculate the value of
inventory and CGS
On May 1, beginning inventory consists of 10 items at a cost of $10 each. On May 3, 10 items are purchased at $12 each. On May 8, 12 items are sold. On May 15, 10 items are purchased at $14 each. Will the Cost of Goods sold be higher using a FIFO periodic inventory system or a perpetual system?
Cost of Goods sold will be the same
Acme, Inc. had CGS of $2,000. If beginning inventory was $2,100 and ending inventory was $500, Acme's purchases must have been $________?
$400
How to calculate weighted average cost
((# of units * price) + (# of units * price))/100
Days to sell
365/inventory turnover
In a perpetual inventory system, inventory is initially recorded at
cost
Which of these might cause the value of inventory to fall below its original cost?
damage, obsolescence, and increased competition
FIFO actually describes how to calculate the cost of
goods sold
Gross profit %
gross profit/net sales
Inventory turnover ratio
CGS/Avg. Inventory
Which of the following financial statement line items are affected by the inventory method chose?
Income tax expense, income before income tax expense, gross profit, income from operations, net income
On the income statement, Revenue - Sales Returns - Sales DIscounts = ________?
net sales
Using a different inventory accounting method leads to
reporting a different amount for cost of goods sold
How to calculate gross profit
sales revenue - CGS
Inventory is recorded as a current asset on
the balance sheet
