FIFO, LIFO and Inventory Turnover

What does FIFO stand for?

• Fast in, fast out
• First in, first out
• First income, first out

Which cost flow method uses the oldest inventory cost as cost of goods sold when a product is sold?

• FIFO
• LIFO
• Cash
• Weighted Average

Which of the following cost flow methods would provide the lowest amount of net income (assuming normal inflation)?

• FIFO
• LIFO
• Cash
• Weighted Average

The inventory turnover ratio measures what?

• How many days, on average, it takes to sell a company's inventory.
• How quickly a company sells its inventory.
• The profit made from selling inventory.
• The risk associated with selling inventory.

Which inventory management method assumes assets (inventory) produced or acquired last are the ones used, sold or disposed of first?

• .FIFO Method

• Just In Case (JIC

• Periodic inventory

• LIFO Method

When purchase costs regularly rise, the following occurs under FIFO.

FIFO reports the _______(lowest/highest) cost of goods sold -yielding the ______(lowest/highest) gross profit and net income.

What are the four methods used to assign costs to inventory and cost of goods sold?

• Specific identification, FIFO, LIFO, and weighted average

• First-in, First-out (FIFO), Last-in, First-out (LIFO), Average cost, and Retail method

• Specific identification, Average cost, Gross profit method, and Retail method

• FIFO, LIFO, Average cost, and Gross profit method

What is the purpose of taking a physical count of inventory?

• To calculate the inventory turnover ratio

• To determine the cost of goods sold

• To adjust the inventory account balance to the actual inventory available

• To identify damaged or obsolete goods

Too much inventory on hand causes:

• An increase to the losses caused by price decline

• an increase to the cost of safeguarding assets

• funds to be tied up that could be used to improve operations

• all of these choices

The following units of an inventory item were for sale during the year:

Beginning inventory 9 units at $48

First purchase 17 units at $53

Second purchase 27 units at $55

Third purchase 15 units at $62

The firm uses the periodic inventory system. During the year, 51 units of the item were sold. The value of ending inventory using LIFO is:

• $856

• $1,072

• $1,288

• $432