FAR — Financial Accounting & Reporting — Quiz 42

Questions in this quiz (10)

1. Which term refers to the cost of transporting purchased inventory to the buyer?

   • Purchase discount
   • Freight-in
   • Sales discount
   • Delivery expense

2. Which of the following is included in inventory cost?

   • Freight-in costs
   • Administrative expenses
   • Selling expenses
   • Advertising expenses

3. Which financial statement reports ending inventory?

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

4. Which principle requires inventory to be reported at lower of cost or market?

   • Matching principle
   • Conservatism principle
   • Revenue recognition principle
   • Consistency principle

5. What is the purpose of inventory costing methods?

   • Determine revenue
   • Allocate costs between COGS and ending inventory
   • Eliminate inventory accounting
   • Calculate wages

6. Which inventory method results in lower COGS during rising prices?

   • LIFO
   • FIFO
   • Weighted-average
   • Specific identification

7. Which inventory method results in higher COGS during inflation?

   • FIFO
   • LIFO
   • Weighted-average
   • Specific identification

8. Which inventory method is allowed under GAAP but not IFRS?

   • FIFO
   • Weighted-average
   • LIFO
   • Specific identification

9. Which method assigns inventory cost based on average unit cost?

   • FIFO
   • LIFO
   • Weighted-average
   • Specific identification

10. Which transaction increases cost of goods sold under the perpetual system?

    • Purchasing inventory
    • Selling inventory
    • Returning inventory
    • Receiving inventory