financial accounting week 6

the ______cost flow assumption more realistically matches the current cost of inventory with current sales revenue.

LIFO

A multiple-step income statement reports multiple levels of

income

Which inventory costing method assumes that the inventory's costs flow out in the same order the goods are received?

FIFO

A major difference between companies that provide services and companies that manufacture or sell goods is that those that manufacture or sell goods must account for:

inventory

Items held for sale in the normal course of business are referred to as

inventory

Major differences between service companies and retail or manufacturing companies is that retailers and manufacturers must account for

inventory COGS

_______ __________ inventory includes the cost of components that will become part of the finished product but have not yet been used in production.

raw materials

The definition of inventory includes which of the following items? Multiple select question. Materials used currently in the production of goods to be sold Items held for resale Items held for use or disposal Items currently in production for future sale

Materials used currently in the production of goods to be sold Items held for resale Items currently in production for future sale

Which of the following accounts would be found in the balance sheet of a manufacturing company?

work in process

Because prices change over time, costs reported for these accounts tend to differ among inventory cost methods. Multiple select question. Cost of Goods Sold Inventory Purchases Sales Revenue

Cost of Goods Sold Inventory

Generally, if a company wants its inventory cost flows to be the same as the inventory's physical flows, what inventory method would it use?

FIFO

Which of the following methods are available for costing inventory? (Select all that apply.) Multiple select question. FIFO Simple-average Weighted-average LIFO Specific identification

FIFO Weighted-average LIFO Specific identification

Which of the following accounts are typically reported in the balance sheet of a manufacturing company? Multiple select question. Finished goods Raw materials Work in process Cost of goods sold

Finished goods Raw materials Work in process

Which of the following represent reasons why managers closely monitor inventory levels? Multiple select question. To increase the average days in inventory. To minimize costs of inventory write-downs due to obsolete inventory. To ensure that sufficient units are available.

To minimize costs of inventory write-downs due to obsolete inventory. To ensure that sufficient units are available.

The lower of cost and net realizable value method was developed to

avoid reporting inventory at an amount that exceeds the benefits it provides.

Where is inventory reported in the financial statements?

balance sheet as a current asset

Major differences between service companies and retail or manufacturing companies is that retailers and manufacturers must account for (Select all that apply.) Multiple select question. cost of goods sold. liabilities. Reason: All companies account for liabilities. current assets. Reason: All companies account for current assets. inventory.

cost of goods sold. inventory.

Net sales revenue minus cost of goods sold is

gross profit

The ______ method of valuing inventory was developed to avoid reporting inventory at an amount that is ______ than the benefits it can provide.

lower of cost and net realizable value; greater

What type of company purchases raw materials and makes goods to sell?

manufacturers