Which inventory valuation method assigns the most recent costs to inventory?
A) FIFO (First-In, First-Out)
B) LIFO (Last-In, First-Out)
C) Weighted Average
D) Specific Identification
Under the FIFO method, the cost of goods sold is based on:
A) The most recent purchases
B) The earliest purchases
C) The average cost of inventory
D) The selling price of inventory
Which inventory method assumes that the first items purchased are the first to be sold?
A) LIFO
B) FIFO
C) Weighted Average
D) Specific Identification
What is the primary effect of using LIFO in a period of rising prices?
A) Higher ending inventory
B) Lower cost of goods sold
C) Higher cost of goods sold
D) No effect on cost of goods sold
In the weighted average method, the cost of goods sold is calculated by:
A) Using the cost of the most recent purchases
B) Using the cost of the earliest purchases
C) Using the average cost of all goods available for sale
D) Using the cost of specific units sold
Which inventory method assigns the most recent purchases to the cost of goods sold?
A) FIFO
B) LIFO
C) Weighted Average
D) Specific Identification
Which method of inventory valuation is most commonly used under IFRS?
A) FIFO
B) LIFO
C) Weighted Average
D) Specific Identification
In periods of rising prices, which inventory method results in the lowest net income?
A) FIFO
B) LIFO
C) Weighted Average
D) Specific Identification
What is the main advantage of using the FIFO method during inflation?
A) It provides a more accurate representation of current inventory costs
B) It results in higher taxes due to higher profits
C) It minimizes the cost of goods sold
D) It is easier to track than other methods
Which of the following inventory valuation methods is NOT acceptable under IFRS?
A) FIFO
B) LIFO
C) Weighted Average
D) Specific Identification
In the LIFO method, which of the following is true?
A) The oldest inventory items are used first
B) The most recent inventory items are used first
C) The average cost of inventory is used
D) The cost of goods sold is calculated based on specific units sold
Which of the following inventory valuation methods is used when items are easily identifiable and tracked individually?
A) FIFO
B) LIFO
C) Weighted Average
D) Specific Identification
Which inventory method results in the lowest ending inventory during periods of rising prices?
A) FIFO
B) LIFO
C) Weighted Average
D) Specific Identification
Under which method are costs of goods sold and ending inventory both affected by price fluctuations?
A) FIFO
B) LIFO
C) Weighted Average
D) Specific Identification
The Specific Identification method is commonly used by:
A) Manufacturers of mass-produced goods
B) Retailers selling small, inexpensive items
C) Businesses selling unique or expensive items
D) Service providers
Which inventory valuation method uses a constant rate of cost allocation to all units sold?
A) FIFO
B) LIFO
C) Weighted Average
D) Specific Identification
The FIFO method reflects:
A) The cost of the most recent inventory in the ending inventory
B) The cost of the oldest inventory in the ending inventory
C) The average cost of all inventory
D) The actual cost of each unit sold
Which method would produce the most tax liability in a period of inflation?
A) FIFO
B) LIFO
C) Weighted Average
D) Specific Identification
Which of the following is a disadvantage of the LIFO method?
A) It results in higher ending inventory during inflation
B) It is not allowed under IFRS
C) It produces a more accurate representation of current inventory values
D) It is difficult to implement for companies with fluctuating inventory prices
Which of the following is true regarding the weighted average method?
A) It assigns different costs to each unit based on the purchase price
B) It averages the cost of all goods available for sale
C) It uses the most recent inventory purchases first
D) It uses only the earliest inventory purchases
The LIFO method is most appropriate for which type of inventory?
A) Perishable goods
B) High-value items
C) Raw materials
D) Non-perishable goods with a long shelf life
Which of the following inventory valuation methods is best for a company that wants to minimize its taxable income during inflationary periods?
A) FIFO
B) LIFO
C) Weighted Average
D) Specific Identification
Under the FIFO method, during times of rising prices, a company’s cost of goods sold is:
A) Higher than under the LIFO method
B) Lower than under the LIFO method
C) Equal to that of the LIFO method
D) Not affected by price changes
Which of the following is the primary disadvantage of using the FIFO method during inflationary periods?
A) It results in higher cost of goods sold
B) It produces a lower net income
C) It results in higher ending inventory and higher taxes
D) It is more difficult to track inventory
Which of the following inventory valuation methods results in the most accurate reflection of current market values?
A) FIFO
B) LIFO
C) Weighted Average
D) Specific Identification
Which method assumes that the most recent inventory purchased is still available for sale?
A) FIFO
B) LIFO
C) Weighted Average
D) Specific Identification
