FIFO LIFO AVCO CONCEPT

A company uses the FIFO method to price issues of raw materials to production and value its closing inventory.

Which of the following statements best describes the FIFO method?

• The last materials received will be the first issued to production

• The first materials issued will be prices at the cost of the most recently received materials

• The last materials issued will be those that were most recently received

• the first materials issued will be priced at the cost of the earliest goods in inventory

in the period of rising prices, which of the following will be true with first in first out system of pricing inventory issues?

• Product cost are overstated and profits understated.

• Product cost are overstated and profits overstated.

• Product cost are understated and profits understated.

• Product cost are understated and profits overstated.

A firm has a high level of inventory turnover and uses FIFO issue pricing system.

In a period of rising purchase prices, the closing inventory valuation is which of the following?

• Close to current purchase prices

• Based on the prices of the first items received

• Much lower than the current purchase price

• The average of all goods purchased in the period

If FIFO rather than LIFO was used when materials are falling, which of the following would be correct?

• Production costs will higher

• Production costs will be lower

• Profits will be higher

• Profits will be lower

If a company wanted to ensure that its cost of production included the most recent cost for material, what would be the best method of inventory valuation?

• periodic weighted average

• First-in, First-out (FIFO)

• cumulative weighted average cost

• last-in, first-out (LIFO)

Which of the following statements describes the FIFO method of inventory valuation?

• • Both the issues and the closing inventory are valued at the latest acquisition prices

• • Both the issues and the closing inventory are valued at the oldest acquisition prices

• • Issues are valued at the latest acquisition prices and the closing inventory valuation will reflect the oldest acquisition prices

• • Issues are valued at the oldest acquisition prices and the closing inventory valuation will reflect the latest acquisition prices

When the prices of raw materials are rising which of the following statements is true?

• Periodic weighted average will give a lower closing inventory valuation than the cumulative    weighted average pricing method

  
  

• Under LIFO production costs will be lower than under FIFO

  
  

• FIFO will give a lower profit figure than LIFO

  
  

• LIFO will give a lower closing inventory valuation than FIFO