Which of the following statements is true for a company using the periodic inventory method? A. During periods of rising prices the FIFO inventory costing method will have a lower ending inventory than the LIFO inventory costing method. B. Cost of Goods Sold is updated each time a sale of merchandise occurs. C. The weighted average cost inventory costing method assigns a higher cost per unit to cost of goods sold than to items remaining in inventory. D. Loss is debited at the end of the accounting period to adjust for the difference in the general ledger balance of inventory and the actual physical count of inventory. E. None of the above statements are true.

Which of the following statements is true for a company using the periodic inventory method? A. During periods of rising prices the FIFO inventory costing method will have a lower ending inventory than the LIFO inventory costing method. B. Cost of Goods Sold is updated each time a sale of merchandise occurs. C. The weighted average cost inventory costing method assigns a higher cost per unit to cost of goods sold than to items remaining in inventory. D. Loss is debited at the end of the accounting period to adjust for the difference in the general ledger balance of inventory and the actual physical count of inventory. E. None of the above statements are true.

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Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter6: Cost Of Goods Sold And Inventory

Section: Chapter Questions

Problem 36BE: Effects of Inventory Costing Methods Refer to the information for Tyler Company above. Required: 1....

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Inventory Valuation Specific identification method Weighted average cost method FIFO method LIFO method LIFO liquidation LIFO conformity rule LIFO reserve Replacement cost Inventory profit Lower-of-cost-or-market (LCM) rule Inventory turnover ratio Number of days sales in inventory Moving average (Appendix) The name given to an average cost method when a weighted average cost assumption is used with a perpetual inventory system. An inventory costing method that assigns the same unit cost to all units available for sale during the period. A conservative inventory valuation approach that is an attempt to anticipate declines in the value of inventory before its actual sale. An inventory costing method that assigns the most recent costs to ending inventory. The current cost of a unit of inventory. An inventory costing method that assigns the most recent costs to cost of goods sold. A measure of how long it takes to sell inventory. The IRS requirement that when LIFO is used on a tax return, it must also be used in reporting income to stockholders. An inventory costing method that relies on matching unit costs with the actual units sold. The portion of the gross profit that results from holding inventory during a period of rising prices. The result of selling more units than are purchased during the period, which can have negative tax consequences if a company is using LIFO. The excess of the value of a companys inventory stated at FIFO over the value stated at LIFO. A measure of the number of times inventory is sold during the period.
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