5 Written Questions

1. * Specifically identifies cost of each item
   * Appropriate for large, costly, distinguishable products.
2. Purchases.
3. Beginning Inventory
   + Purchases
   - Ending Inventory
   = Cost of Goods Sold.
4. Inventory (ending) XX
   Purchase returns and allowances XX
   Purchase discounts XX
   Cost of Goods Sold XX
   Inventory (beginning) XX
   Purchases XX
   Transportation in XX
5. Cost of Goods Available for Sale/Number of Units Available for Sale.

5 Multiple Choice Questions

1. * Moving average computes a new weighted average cost per unit after each purchase of inventory
   * Moving average results in lower COGS during period of rising prices.
   1. Differences between Periodic and Perpetual Applications of LIFO.
   2. Weighted Average Cost Flow Assumption.
   3. Weighted Average Cost per Unit.
   4. Differences between Moving and Weighted Average Cost Flow Assumptions.
2. * Ending inventory composed of units most recently acquired
   * COGS comprised of oldest units
   * Most closely matches most firms' actual physical flows
   * Produces higher net income and higher valuation of inventory in periods of rising prices.
   1. LIFO Cost Flow Assumption.
   2. What does FIFO stand for?
   3. FIFO Cost Flow Assumption.
   4. Weighted Average Cost Flow Assumption.
3. * Ending inventory composed of oldest inventory
   * COGS composed of newest inventory
   * Produces lower net income and ending inventory valuation in periods of rising prices.
   1. What does FIFO stand for?
   2. FIFO Cost Flow Assumption.
   3. LIFO Cost Flow Assumption.
   4. Weighted Average Cost Flow Assumption.
4. First in First out.
   1. FIFO Cost Flow Assumption.
   2. What does FIFO stand for?
   3. LIFO Cost Flow Assumption.
   4. Equation for COGS.
5. * Weighted average cost per unit is the average cost of all units held during period
   * Each item is treated as if costed at WA cost.
   1. LIFO Cost Flow Assumption.
   2. Weighted Average Cost per Unit.
   3. FIFO Cost Flow Assumption.
   4. Weighted Average Cost Flow Assumption.

4 True/False Questions

1. Weighted Average Cost per Unit Formula. → * Weighted average cost per unit is the average cost of all units held during period
   * Each item is treated as if costed at WA cost.

   True        False

2. Equation for COGS. → First in First out.

   True        False

3. Cost Flow Assumptions for Perpetual Inventory System. → * Specific Identification
   * Moving Average
   * FIFO
   * LIFO.

   True        False

4. Differences between Periodic and Perpetual Applications of LIFO. → * Moving average computes a new weighted average cost per unit after each purchase of inventory
   * Moving average results in lower COGS during period of rising prices.

   True        False