CHAPTER 7: ACC 212

Assume a periodic inventory system is used. Which inventory costing method generally results in the most recent costs being assigned to ending inventory?

FIFO

Which of the following is merchandise inventory?

Goods held for sale in the normal course of business

Assume a periodic inventory system is used. The LIFO inventory costing method assumes that the cost of the units most recently purchased is the:

first to be assigned to cost of goods sold.

Generally accepted accounting principles (GAAP) require that the inventory be reported at

lower of cost or market.

The process of buying and selling inventory is known as inventory:

turnover.

Goods placed in inventory are initially recorded at:

the amount paid to acquire the asset and prepare it for sale.

When a company sells goods, it removes their cost from the balance sheet and reports the cost on the income statement as:

Cost of Goods Sold.

Which of the following would not be affected by the choice of an inventory costing method (that is, choosing between FIFO, LIFO, weighted average, and specific identification)?

Sales revenue

What is the inventory costing method that adds together the total cost of all goods available for sale during the period, and then divides that by the number of units available for sale to get a value to assign to all goods sold and all goods remaining in inventory?

Weighted average

FIFO, LIFO, and weighted average inventory costing methods are based on:

assumptions that accountants make about the flow of inventory costs.