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Accounting Policies: AVCO to FIFO Method Quiz

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Accounting Policies: AVCO to FIFO Method Quiz

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Questions and Answers

What change in accounting policy is the business intending to make?

Switch from AVCO to FIFO method (correct)

Switch from LIFO to AVCO method

Switch from FIFO to specific identification method

Switch from FIFO to AVCO method

How are prices of goods expected to change during the forthcoming year?

Expected to rise (correct)

Expected to decrease

Expected to remain stable

Expected to fluctuate

If prices rise during the forthcoming year, what effect will it have on profit and closing inventories under the FIFO method?

Decrease in profit and an increase in the value of closing inventories

Increase in profit and a decrease in the value of closing inventories

Increase in profit and an increase in the value of the closing inventories (correct)

Decrease in profit and a decrease in the value of closing inventories

What is the likely effect of a switch from AVCO to FIFO with rising prices on profit?

<p>Increase in profit</p> Signup and view all the answers

Under the FIFO method, what happens when prices rise?

<p>Profit increases and closing inventories increase</p> Signup and view all the answers

Accounting Policies: AVCO to FIFO Method Quiz

Choose a study mode

Podcast

Questions and Answers

What change in accounting policy is the business intending to make?

How are prices of goods expected to change during the forthcoming year?

If prices rise during the forthcoming year, what effect will it have on profit and closing inventories under the FIFO method?

What is the likely effect of a switch from AVCO to FIFO with rising prices on profit?

Under the FIFO method, what happens when prices rise?

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