1. Which of the following does not represent the idea of accounting conservatism?

A

None of the above

B

Provide for all probable losses

C

Record an asset rather than an expense

D

Record a liability at the highest reasonable amount

E

Anticipate no gains

2.

Under which of the following inventory costing methods is the cost of goods sold based on the average cost of the purchases during the period?

A

Last in first out

B

None of the above

C

Average cost

D

Specific unit cost

E

First in first out

3.

Which method would be used to cost milk and other dairy products?

A

None of the above

B

Last-in, First-out

C

Specific unit cost

D

Average cost

E

First-in, First-out

4.

Periodic and Perpetual Systems and Inventory Costing Methods

During July 2014, Micanopy Inc., sold 500 units of its product Empire for $8,000. See the ATTACHED table for the available units.

A sale of 500 units was made after purchase 3. Of the units sold, 200 came from beginning inventory and 300 came from purchase 3.

REQUIRED:

Determine cost of goods available for sale and ending inventory in units. Then determine the costs that should be assigned to cost of goods sold and ending inventory under each of the following assumptions:

(1) Costs are assigned under the PERIODIC inventory system using (a) the specific identification method, (b) the average-cost method, (c) the FIFO method, and (d) the LIFO method.

For each alternative, also show the gross profit.

Cost $ 2 4 Beginning inventory Purchase 1 Purchase 2 Purchase 3 Purchase 4 Units 200 80 120 300 180 6 9 12