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Match the Descriptions with Inventory Costing Methods

Question 177

Matching

Match the descriptions with inventory costing methods

Premises:

Responses:

Tends to match older costs with current revenue.

Specific identification

Cost of goods sold and inventory are costed at the oldest costs.

Weighted average

Inventory and cost of goods sold are valued at the same unit cost.

FIFO

Requires computation of an average cost for the entire period excluding beginning inventory.

None of the above is correct.

Requires computation of a new unit cost after each purchase and after each sale.

Subject to manipulation by arbitrary choice of unit costs when sold or issued.

Cost of goods sold is costed at the oldest unit costs.

Inventory is costed at the newest unit costs

Premises:

Tends to match older costs with current revenue.

Cost of goods sold and inventory are costed at the oldest costs.

Inventory and cost of goods sold are valued at the same unit cost.

Requires computation of an average cost for the entire period excluding beginning inventory.

Requires computation of a new unit cost after each purchase and after each sale.

Subject to manipulation by arbitrary choice of unit costs when sold or issued.

Cost of goods sold is costed at the oldest unit costs.

Inventory is costed at the newest unit costs

Responses:

Specific identification

Weighted average

FIFO

None of the above is correct.

Correct Answer:

Premises:

Responses:

Tends to match older costs with current revenue.

Cost of goods sold and inventory are costed at the oldest costs.

Inventory and cost of goods sold are valued at the same unit cost.

Requires computation of an average cost for the entire period excluding beginning inventory.

Requires computation of a new unit cost after each purchase and after each sale.

Subject to manipulation by arbitrary choice of unit costs when sold or issued.

Cost of goods sold is costed at the oldest unit costs.

Inventory is costed at the newest unit costs

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