What is the main difference between the inventory of a trading company and that of a manufacturing company?

• The trading company has raw material inventory

• The manufacturing company does not have finished goods in inventory

• The manufacturing company records inventory only in one account

• The trading company only has one type of inventory, while the manufacturing company has several types

• The trading company has work-in-progress inventory

The main components in determining the value of inventory are?

• Selling price and quantity of goods sold

• Production cost and selling price

• Physical unit quantity and acquisition cost per unit

• Selling price and shipping cost

• Acquisition cost and selling price

Which statement is true about the FIFO method?

• The items purchased last will be sold first

• The items purchased first will be the first to be sold

• The cost of goods sold is determined based on the latest item prices

• FIFO can only be applied in a perpetual inventory system

• FIFO does not take into account the beginning inventory in its calculations

The inventory recording system that continuously updates the inventory balance every time a transaction occurs is?

• Periodic system

• Perpetual system

• Consignment system

• Specific identification system

• Cost flow system

In the periodic system, inventory recording is done at?

• Every time a transaction occurs

• Every month

• At the end of the accounting period

• Only when there is a sale

• Only when there is a purchase

Which statement is not included in inventory costs?

• Transportation costs

• Import taxes

• Insurance during shipping

• Purchase discounts received

• Advertising costs for product promotion

According to the ownership provisions of goods based on FOB Shipping Point?

• Ownership of the goods is transferred to the buyer when the goods are shipped

• Shipping costs are borne by the seller

• Ownership of the goods remains with the seller until the goods are received by the buyer

• Inventory should not be recorded until the goods are received by the buyer

• FOB Shipping Point only applies to domestic transactions

Why is the specific identification method inefficient for businesses with a large and varied inventory?

• Requires a complicated recording system for each unit of goods

• Does not reflect current market prices

• Requires companies to sell goods in a specific order

• Requires the use of a perpetual system

• Cannot be used in financial reports

The inventory valuation method that uses the average cost per unit each time a purchase is made is?

• FIFO

• LIFO

• Specific identification

• Weighted average

• Moving average

The cost of goods sold (COGS) can be calculated using the following formula?

• Ending Inventory + Purchases - Beginning Inventory

• Purchases + Beginning Inventory - Ending Inventory

• Sales - Gross Profit

• Purchases - Returns - Allowances

• Sales price per unit × Number of units sold