Weiss Company purchased two identical inventory items

1. Weiss Company purchased two identical inventory items. The first purchase cost $30 and the second cost $32. When the Company sold one of the items for $40, it expensed $30 to its cost of goods sold account. Based on this information which of the following cost flow methods is the company using?

a) FIFO

b) LIFO

c) Weighted average 

d) NIFO

2. Weiss Company purchased two identical inventory items. The first purchase cost $30 and the second cost $32. The Company sold one of the items for $40. If the Company uses the LIFO cost flow method, the balance in the inventory account after the sales transaction will be

a) $32.

b) $31.

c) $30.

d) $8.

3. Weiss Company purchased two identical inventory items. The first purchase cost $30 and the second cost $32. The Company sold one of the items for $40. If the Company uses the weighted average cost flow method, the amount of gross margin shown on the income statement will be

a) $12.

b) $8.

c) $10. 

d) $9.

4. Which of the following cost flow methods would provide the lowest amount of net income in an inflationary environment?

a) FIFO

b) LIFO 

c) Weighted average

d) NIFO

5. The following information was drawn from the inventory records of Alpha Company as of December 31, Year 2.

 

Beginning inventory (purchased in Year 1) 200 Units @ $5 each
Purchases made in Year 2 800 Units @ $8 each
Units Sold 900 Units @ $12 each

 

Which of the following is the amount of the gross margin assuming Alpha uses a FIFO cost flow method?

a) $500

b) $800

c_ $4,200

d) $6,600

6. The following information was drawn from the inventory records of Alpha Company as of December, Year 2.

 

Beginning inventory (purchased in Year 1) 200 Units @ $5 each
Purchases made in Year 2 800 Units @ $8 each
Units Sold 900 Units @ $12 each

 

Which of the following is the amount of the gross margin shown on the Year 2 income statement assuming Alpha uses a LIFO cost flow method?

a) $3,900

b) $6,900

c) $4,200

d) $6,600

7.

The following information was drawn from the inventory records of Alpha Company as of December, Year 2.

 

Beginning inventory (purchased in Year 1) 200 Units @ $5 each
Purchases made in Year 2 800 Units @ $8 each
Units Sold 900 Units @ $12 each

 

Which of the following is the amount of the gross margin shown on the Year 2 income statement assuming Alpha uses a weighted average cost flow method?

a) $500

b) $800

c) $4,140

d) $6,660

8.

The following information was drawn from the inventory records of Preston Company.

 

Beginning inventory (purchased in Year 1) 100 Units @ $10 each
1stPurchasemade in Year 2 400 Units @ $12 each
2ndPurchase made in Year 2 500 Units @ $14 each
Units Sold 950 Units @ $15 each

 

Based on this information, which of the following represents the amount of ending inventory appearing on the balance sheet assuming a LIFO cost flow?

a) $700

b) $600

c) $500

d) $300

9.

The cash flow associated with buying and selling inventory is not affected by the inventory cost flow method. This statement is

 

a) true.

b) false. 

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