Question Details

The accounting principle that requires that the cost flow 



1.	A problem with the specific identification method is that 
a.	inventories can be reported at actual costs.
b.	management can manipulate income.
c.	matching is not achieved.
d.	the lower-of-cost-or-net realizable value basis cannot be applied.

	2.	The selection of an appropriate inventory cost flow assumption for an individual company is made by
a.	the external auditors.
b.	the IASB.
c.	the internal auditors.
d.	company management.

	3.	Which one of the following inventory methods is often impractical to use?
a.	Specific identification
b.	Average cost
c.	FIFO
d.	All of the above are practical to use

	4.	The accounting principle that requires that the cost flow assumption be consistent with the physical movement of goods is
a.	called the matching principle.
b.	called the consistency principle.
c.	nonexistent; that is, there is no accounting requirement.
d.	called the physical flow assumption.
	5.	Which of the following statements is correct with respect to inventories?
a.	The FIFO method assumes that the costs of the earliest goods acquired are the last to be sold.
b.	It is generally good business management to sell the most recently acquired goods first.
c.	Under FIFO, the ending inventory is based on the latest units purchased.
d.	FIFO seldom coincides with the actual physical flow of inventory.





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