Reference no: EM132825160

Problem 1: When prices are rising, which method of inventory, if any, will result in the lowest relative net cash outflow (including the effects of taxes, if any)?

A.) LIFO

B.) FIFO

C.) Weighted average

D.) None of these: the choice of inventory methods does not affect cash flows.

Problem 2: Which inventory costing method will produce an amount for cost of goods sold that is closest to current market value?

A.) Weighted average

B.) Specific identification

C.) LIFO

D.) FIFO

Problem 3: Blake Company purchased two identical inventory items. The item purchased first cost $16.00, and the item purchased second cost $18.00. Blake sold one of the items for $24.00. Which of the following statements is true?

A.) Ending inventory will be lower if Blake uses the weighted-average rather than the FIFO inventory cost flow method.

B.) Cost of goods sold will be higher if Blake uses the FIFO rather than the weighted-average inventory cost flow method.

C.) The dollar amount assigned to ending inventory will be the same no matter which inventory cost flow method is used.

D.) Gross margin will be higher if Blake uses LIFO rather than the FIFO inventory cost flow method.