Accounting Policies: AVCO to FIFO Method Quiz
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Accounting Policies: AVCO to FIFO Method Quiz

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@TriumphantPrehistoricArt

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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

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