Accounting : Chapter 6

Which should be included in the physical inventory of a company?

- Goods in transit from another company shipped FOB shipping point. - Goods shipped on consignment to another company.

The cost of flow method that often parallels the actual physical flow of merchandise is the..

FIFO Method

Cost of goods purchased less the end inventory equals the cost of goods sold... T/F

False

Goods in transit would be included in the ending inventory of the buyer and the seller. T/F

False

The LIFO method assumes that the earliest goods purchased are the first to be sold. T/F

False

A company may use more than one inventory costing method concurrently. T/F

True

When prices are rising, FIFO results in a higher ending inventory than LIFO. T/F

True

Cost of goods sold is computed from the following equation...

beginning inventory + cost of goods purchased - ending inventory

Goods in transit should be included in the inventory of the..

buyer when the terms are FOB shipping point

Under a consignment arrangement, the..

cosigner has ownership until goods are sold to a customer

Cost of goods available for sale consists of two elects: beginning inventory and..

cost of goods purchased

In the periods of rising prices, LIFO will produce..

lower net income than FIFO