Inventory Management Paper 3

1

Which of the following changes in accounting policies resulting from a significant change in the expected pattern of economic benefit will increase profit?






2

On January 1, a company has no opening inventory balance. The following purchases are made during the year:
.......................Units Purchased.... Unit Cost
January 1............5,000 ..............$10.00
April 1 ................5,000 ................9.00
July 1................. 5,000 ................8.00
October 1........... 5,000 ...............7.50
There are 10,000 units in inventory on December 31. If the company uses the last-in, first-out (LIFO) method of inventory valuation, cost of goods sold for the year will be:






3

The advantage of the last-in, first-out inventory method is based on the assumption that






4

Which inventory cost flow method is prohibited according to IFRS?






5

The inventory method yielding the same inventory measurement and cost of goods sold whether a perpetual or periodic system is used is






6

In a period of rising prices, which one of the following inventory methods usually provides the best matching of expenses against revenues?






7

Which one of the following actions would result in a decrease in income?






8

In periods of rising costs, which one of the following inventory cash flow assumptions will result in higher cost of sales?






9

The weighted average for the year inventory cost flow method is applicable to which of the following inventory systems? Periodic Perpetual






10

accounting for inventories, generally accepted accounting principles require departure from the historical cost principle when the utility of inventory has fallen below cost. This rule is known as the “lower-of-cost-or-market” rule. The term “market” as defined here means






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