Chapter 8

Question 1

What are the different cost formulas of cost flow assumption?

Answer 1

Specific Identification
FIFO Method
Average Method

Question 2

True or False: PAS allows the use of last-in-first-out method.

Answer 2

False.

Question 4

What are the cost formulas to determine the cost of ending inventory and cost of goods sold?

Answer 4

Specific Identification
First-In, First-Out Method (FIFO Method)
Average Method

Question 5

True or False: PAS 2 allows the use of LIFO.

Answer 5

False

Question 6

True or False: The goal of inventory cost flow assumption is to facilitate the allocation of the TGAS to the cost of goods sold and the ending inventory.

Answer 6

True

Question 7

This cost formula is applied to the type of inventories that are not ordinarily interchangeable and are produced and segregated for specific projects.

Answer 7

Specific Identification

Question 8

This cost formula assumes the items of inventory that were purchased or produced first are sold first.

Answer 8

FIFO method

Question 9

Under this cost formula, the cost of each item is determined from the weighted average of the cost of similar items at the beginning of the period and the cost of similar items purchased or produced during the period.

Answer 9

Average Method

Question 10

How is weighted average unit cost computed?

Answer 10

TGAS at cost / TGAS in units