17 Questions
What is the cost of sales for April using the continuous weighted average cost method?
$65.00
In the context of inventory valuation, what is the primary objective of using the weighted average cost method?
To assign a uniform cost to each unit of inventory
Why is it important to calculate the unit average cost when using the weighted average cost method for inventory valuation?
To maintain consistency in assigning costs to inventory units
Which factor directly influences the value of closing inventory when using the periodic weighted average cost method?
Frequency of inventory purchases during the period
What is a possible consequence of not considering the weighted average cost method in inventory valuation?
Inaccurate assessment of cost of goods sold
How does the weighted average cost method affect the comparability of financial statements over different accounting periods?
Enhances comparability across accounting periods
Which statement accurately describes the continuous weighted average cost method?
Unit average cost is recalculated each time there is a purchase or a sale.
Using the continuous weighted average cost method and the given information, what is the value of closing inventory on February 7?
$108.00
Using the periodic weighted average cost method and the given information, what is the value of closing inventory on April 17?
$109.00
Using the periodic weighted average cost method and the given information, what is the cost of sales for April?
$88.00
Which statement accurately describes the periodic weighted average cost method?
Unit average cost is calculated once only at the end of an accounting period.
Which method recalculates the unit average cost after each purchase and sale transaction?
Continuous weighted average cost method
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
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
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
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
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
Test your knowledge on accounting concepts by calculating the value of closing inventory using the continuous weighted average cost method. Understand how unit average cost is recalculated in different scenarios such as purchase or sale of goods.
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