Financial Accounting Quiz on Inventories or Stock

August 21st, 2010 Comments off
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Refresh or test your accounting knowledge on Inventories or stocks:

Multiple Choice Questions ( with answers(below))

1. The lower of cost or market method for valuing inventories
a. Recognizes reductions in the values of inventories held by a corporation in the period in which the decline in value occurs
b. Recognizes increases in the values of inventories held by a company in the period in which the increase in value occurs
c. Recognizes reductions in the values of inventories held by a company in the period in which the goods are sold
d. All of the above

2. The method of inventory accounting that, during periods of rising periods, results in a balance sheet valuation for inventories that is between the LIFO and FIFO values is the
a. Weighted-average method
b. First-in, first-out method
c. Last-in, first-out method
d. Specific identification method

3. The method of inventory accounting that has been adopted by a majority of companies use in part to the lower income taxes its use creates during periods of rising period is the
a. Last –in, first –out method
b. Specific identification method
c. First-in, first-out method
d. Weighted-average method

4. The method of inventory accounting which results in balance sheet values that are closest in the cost of replacing the inventories in periods of changing prices is the

a. First-in, first-out method
b. Specific identification method
c. Last-in, first-out method
d. Weighted average method

5. The method of inventory accounting which specifically identifies units sold and expenses their costs against the revenues generated from their sale is the

a. Specific identification method
b. Last-in, first-out method
c. First-in, first-out method
d. Weighted average method

Answers:
1 to 5 = answer (a)

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