Indicate whether each of the following statements is true or false.________ a)To compute cost of goods sold under the weighted-average method, it is necessary to first compute the average cost per unit.________ b)The average cost per unit is computed by dividing the total cost of goods purchased by the number of units sold.________ c)Under the FIFO method, each time units are sold, the cost per unit of the oldest inventory is applied to the number of units sold.________ d)If a company uses the perpetual inventory system and sales and purchases occur intermittently, the company will not be able to use the LIFO method of cost flow.________ e)A U.S. company can use LIFO for income tax purposes only if it also uses LIFO for financial reporting purposes.

Question

Quizplus · Accepted Answer

b)False c)True d)False e)Ta)This is true. The first step in applying the weighted-average method is computing the weighted average cost per unit.b)This is false. Average cost per unit is calculate by dividing cost of goods available for sale by the number of units available for sale.c)This is true. Under the FIFO method, each time units are sold, the cost per unit of the oldest inventory is applied to the number of units sold.d)This is false. When maintaining perpetual inventory records, using the weighted-average or LIFO cost flow methods leads to timing difficulties. However, accountants can solve cost flow timing problems by keeping perpetual records of the quantities (number of units)of items purchased and sold separately from the related costs.e)This is true. The U.S. Internal Revenue Service only permits LIFO for tax reporting if it is also used for financial reporting.

Indicate Whether Each of the Following Statements Is True or False.________