Financial Accounting Chapter 7
8 Questions
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Reporting and Interpreting Cost of Goods Sold
Questions and Answers
- 1.Which of the following are acceptable inventory costing methods
- A.
Average cost
- B.
Cost flow
- C.
First In Last Out
- D.
Last In First Out
- E.
First In, First Out
- 2.What is the Cost of Goods Sold Equation?
- A.
BI - P + EI = COGS
- B.
BI + P + EI = COGS
- C.
BI - P - EI = COGS
- D.
BI + P - EI = COGS
- 3.When unit costs are rising, which of the following methods will give you the most profit?
- A.
Average
- B.
LIFO
- C.
FIFO
- 4.Consider the following: Beginning inventory: 2 units $50 Additional Purchases: 2 units $60 4 units $70 Using the FIFO method, what is the amount of COGS if 5 units were sold?
- A.
$180
- B.
$290
- C.
$340
- D.
$350
- 5.If the unit costs of inventory are decreasing, which method should you use to get lower income taxes?
- A.
FIFO
- B.
LIFO
- 6.If the unit costs of inventory are increasing, which method should you use to get lower income taxes?
- A.
FIFO
- B.
LIFO
- 7.Which of the following methods is not allowed by IFRS?
- A.
Average Cost
- B.
FIFO
- C.
LIFO
- 8.Consider the Inventory Turnover Data below: Harley-Davidson: 9.8 How many days does Harley take to sell its inventory?
- A.
28.7
- B.
37.2
- C.
40.8
- D.
60.2
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