Task: Fundamental Accounting Principles
Question 1: Which of the following inventory costing methods will always result in the same values for ending inventory and cost of goods sold regardless of whether a perpetual or periodic inventory system is used?
- FIFO and LIFO.
- LIFO and weighted-average cost.
- specific identification and FIFO.
- FIFO and weighted-average cost.
Question 2: On December 31 of the current year, Hewett Company reported an ending inventory balance of $215,000. The following additional information is also available:
Hewett sold goods costing $38,000 to Trump Enterprises on December 28 and shipped the goods on that date with shipping terms of FOB shipping point. The goods were not included in the ending inventory amount of $215,000 because they were not in Hewett's warehouse.
Hewett purchased goods costing $44,000 on December 29. The goods were shipped FOB destination and were received by Hewett on January 2 of the following year. The shipment was a rush order that was supposed to arrive by December 31. These goods were included in the ending inventory balance of $215,000.
Hewett's ending inventory balance of $215,000 included $15,000 of goods being held on consignment from Rumsfeld Company. (Hewett Company is the consignee.)
Hewett's ending inventory balance of $215,000 did not include goods costing $95,000 that were shipped to Hewett on December 27 with shipping terms of FOB destination and were still in transit at year-end. Based on the above information, the correct balance for ending inventory on December 31 is:
- $194,000
- $209,000
- $200,000
- $156,000
Question 3: Goods in transit are included in a purchaser's inventory:
- at any time during transit.
- when the purchaser is responsible for paying freight charges.
- when the supplier is responsible for freight charges.
- if the goods are shipped FOB destination
Question 4: Regardless of the inventory costing system used, cost of goods available for sale must be allocated between:
- beginning inventory and net purchases during the period.
- ending inventory and beginning inventory.
- net purchases during the period and ending inventory.
- ending inventory and cost of goods sold.