FAR — Financial Accounting & Reporting — Quiz 41

Questions in this quiz (10)

1. Which inventory costing method assigns the same average cost to all units?

   • FIFO
   • LIFO
   • Weighted-average method
   • Specific identification

2. Which of the following best defines cost of goods sold?

   • Cost of inventory purchased
   • Cost of inventory sold during the period
   • Cost of operating expenses
   • Cost of equipment

3. Which financial statement includes cost of goods sold?

   • Balance sheet
   • Income statement
   • Statement of cash flows
   • Statement of retained earnings

4. Which formula calculates cost of goods sold?

   • Beginning Inventory + Purchases – Ending Inventory
   • Beginning Inventory – Purchases + Ending Inventory
   • Purchases – Ending Inventory
   • Beginning Inventory + Ending Inventory

5. Which account increases when inventory is purchased under a perpetual system?

   • Purchases
   • Inventory
   • Expense
   • Accounts payable

6. Which account is credited when inventory is sold under a perpetual system?

   • Inventory
   • Accounts receivable
   • Cost of goods sold
   • Revenue

7. When goods are sold on credit under the perpetual system:

   • One entry is recorded
   • Two journal entries are recorded
   • No entry is recorded
   • Three entries are recorded

8. Which inventory costing method tracks the cost of each specific item?

   • FIFO
   • LIFO
   • Weighted-average
   • Specific identification

9. Which transaction increases inventory?

   • Sales returns
   • Purchase of inventory
   • Cost of goods sold
   • Inventory write-down

10. Which transaction decreases inventory under a perpetual system?

    • Purchase of inventory
    • Sale of inventory
    • Freight-in
    • Purchase returns