41 which statement best explains the weighted average cost flow assumption a a metho 4306279

41 which statement best explains the weighted average cost flow assumption a a metho 4306279

41) Which statement best explains the weighted average cost flow assumption?

A) A method that uses the most recent costs in the calculation of cost of sales.

B) A method that uses the cost of goods available for sale divided by the number of units available for sale.

C) A method that assigns costs to inventories and cost of sales based on actual costs of each item.

D) A method that uses the oldest costs in the calculation of cost of sales.

42) Which statement best explains the retail inventory method?

A) A method for estimating cost of goods sold by applying an average gross margin to the amount of sales recorded in a period.

B) A method that assigns costs to inventories and cost of sales based on actual costs of each item.

C) A method of estimating the cost of ending inventory by applying an average sales margin to the retail price of products.

D) This method is least appropriate for inventory items that are not distinguishable from one another.

43) Which statement best explains the gross margin method?

A) A method for estimating cost of goods sold by applying an average gross margin to the amount of sales recorded in a period.

B) A method that assigns costs to inventories and cost of sales based on actual costs of each item.

C) A method of estimating the cost of ending inventory by applying an average sales margin to the retail price of products.

D) This method is least appropriate for inventory items that are not distinguishable from one another.

44) Which statement is not correct about the retail inventory method?

A) It is an alternative to using a cost flow assumption.

B) It is acceptable for annual financial reporting in Canada.

C) It should only be used if reliable information is available about profit margins.

D) It is a method that estimates ending inventory by applying an average sales margin.

45) Which statement is correct about the retail inventory method?

A) It represents a cost flow assumption.

B) It estimates cost of goods sold by applying an average gross margin to the amount of sales recorded in the period.

C) It can misstate inventory values if unreliable information is used about profit margins.

D) It provides direct information about actual cost of goods sold or ending inventory.

46) Which statement is correct?

A) The retail inventory method estimates ending inventory cost using wholesale prices and an average gross margin.

B) The retail inventory method estimates cost of goods sold using the inventory cost flow equation.

C) The gross margin method estimates ending inventory cost using retail prices and an average gross margin.

D) The gross margin method estimates cost of goods sold using the inventory cost flow equation.

47) Under which cost flow assumption is it the easiest for management to manipulate income?

A) LIFO.

B) FIFO.

C) Weighted average.

D) Income manipulation is not possible through any of these methods.

48) Which statement best explains the difference between the retail inventory and gross margin methods?

A) The gross margin method estimates cost of goods sold by applying an average gross margin to the amount of sales recorded for the period.

B) The gross margin method estimates ending inventory cost using retail prices and an average gross margin.

C) The retail inventory method estimates cost of goods sold by applying an average gross margin to the amount of sales recorded for the period.

D) The retail inventory method estimates ending inventory cost using purchase prices and an average gross margin.

49) Which statement best explains the difference between the retail inventory and gross margin methods?

A) The retail inventory method estimates cost of goods sold by applying an average gross margin to the amount of sales recorded for the period.

B) The retail inventory method estimates ending inventory cost using wholesale prices and an average gross margin.

C) The gross margin method calculates an estimated ending inventory balance by using the inventory cost flow equation.

D) The gross margin method calculates an estimate of cost of goods sold using the inventory cost flow equation.

50) The following information was taken from the inventory records of Hari Ltd.:

Dates

Inventory units

Inventory — Feb 1

100 units at $3.00

Purchases — April 1

300 units at $3.10

Purchases — July 15

200 units at $3.20

Units available for sale

600 units

Sales — May 10

200 units at $6.00

Sales — November 15

100 units at $6.10

What would be the cost of goods sold, assuming that the LIFO method is used in a perpetual inventory system?

A) $920

B) $930

C) $940

D

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