3. Intermediate Accounting

Inventory Accounting — Quiz

Test your understanding of inventory accounting with 5 practice questions.

Practice Questions

Question 1

Which inventory cost flow assumption is prohibited under IFRS but permitted under U.S. GAAP?

Question 2

A company uses the FIFO method. Beginning inventory was $100$ units at $ \$10 $ each. Purchases were $200$ units at $ \$12 $ each. If $150$ units were sold, what is the Cost of Goods Sold (COGS)?

Question 3

Under the 'Lower of Cost or Market' (LCM) rule, if the historical cost of an inventory item is $ \$200 $, its replacement cost is $ \$190 $, and its net realizable value is $ \$210 , what is the value at which the inventory should be reported?

Question 4

Which inventory system continuously updates inventory records for every purchase and sale, providing a real-time balance of inventory on hand?

Question 5

A company uses the gross profit method to estimate its ending inventory. If sales were $ \$500,000 , the cost of goods available for sale was $ \$400,000 , and the historical gross profit rate is $30\%$, what is the estimated ending inventory?