Accounting: Continuous Weighted Average Cost Method Quiz

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What is the cost of sales for April using the continuous weighted average cost method?

$64.00
$65.00 (correct)
$66.00
$63.00

In the context of inventory valuation, what is the primary objective of using the weighted average cost method?

To match the most recent costs with current revenue
To assign a uniform cost to each unit of inventory (correct)
To determine the exact cost of each individual unit sold
To directly link purchase costs to selling prices

Why is it important to calculate the unit average cost when using the weighted average cost method for inventory valuation?

To facilitate the application of First-In-First-Out (FIFO) method
To differentiate between the costs of opening and closing inventory
To maintain consistency in assigning costs to inventory units (correct)
To precisely track the price changes of each individual unit

Which factor directly influences the value of closing inventory when using the periodic weighted average cost method?

Frequency of inventory purchases during the period (A) Signup and view all the answers

What is a possible consequence of not considering the weighted average cost method in inventory valuation?

Inaccurate assessment of cost of goods sold (B) Signup and view all the answers

How does the weighted average cost method affect the comparability of financial statements over different accounting periods?

Enhances comparability across accounting periods (D) Signup and view all the answers

Which statement accurately describes the continuous weighted average cost method?

Unit average cost is recalculated each time there is a purchase or a sale. (A) Signup and view all the answers

Using the continuous weighted average cost method and the given information, what is the value of closing inventory on February 7?

$108.00 (A) Signup and view all the answers

Using the periodic weighted average cost method and the given information, what is the value of closing inventory on April 17?

$109.00 (A) Signup and view all the answers

Using the periodic weighted average cost method and the given information, what is the cost of sales for April?

$88.00 (D) Signup and view all the answers

Which statement accurately describes the periodic weighted average cost method?

Unit average cost is calculated once only at the end of an accounting period. (A) Signup and view all the answers

Which method recalculates the unit average cost after each purchase and sale transaction?

Continuous weighted average cost method (C) Signup and view all the answers

In times of rising prices, when using the first in, first out method for inventory valuation, what will be the relationship between the cost of sales, profit, and closing inventory?

Lower, Higher, Higher (B) Signup and view all the answers

What is true about the unit average cost calculation in the periodic weighted average cost method for valuing closing inventory?

Unit average cost is calculated once only at the end of an accounting period (A) Signup and view all the answers

When an entity uses the continuous weighted average cost method to value closing inventory, which statement is correct?

Unit average cost is recalculated each time there is a purchase of inventory (C) Signup and view all the answers

If an entity has high selling and distribution costs for its Luxury product line, how would this affect the valuation of closing inventory compared to units with lower selling and distribution costs?

Higher valuation for Luxury and lower valuation for other units (A) Signup and view all the answers

What impact does using the weighted average cost method have on the closing inventory valuation when compared to using specific identification?

No impact on valuation between the two methods (C) Signup and view all the answers

Accounting: Continuous Weighted Average Cost Method Quiz

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