ACCT 2010 Exam 3 Study Guide
Questions and Actual Answers 2025-
2026 Updated.
In periods of rising prices, the FIFO method would result in higher net income than LIFO.
True
False - Answer True
Jasmine Company began the month with 50 units in inventory worth $500. On January 12
Jasmine bought 100 units of inventory for $1,200 on account. On January 18, Jasmine sold 125
units of inventory for $15/unit. If Jasmine uses LIFO, what amount of COGS will be recognized
under the perpetual inventory system?
a. $1,450
b. $1,400
c. $1,875
d. $1,416 - Answer $1,450
Trade Tractors purchased the following tractors during the year:
Red tractor $100,000
Blue tractor $80,000
Green tractor $60,000
Yellow tractor $75,000
Assume Trade Tractors uses the specific identification method. If Trade Tractors only had the
Yellow tractor left in its ending inventory and sales for the year totaled $350,000, what is Trade
Tractors gross profit for the year?
a. $110,000
b. $240,000
c. $275,000
, If the only tractor left in ending inventory is the Yellow tractor, that means the other tractors
were sold during the year. Total COGS = 100 + 80 + 60 = 240
350,000 - 240,000 = 110,000
Adventure Industries began the year with 100 units at $4.50/unit. On January 5, it purchased
200 units at $6/unit. On January 10, Adventure sold 150 units for $7/unit. Adventure Industries
uses the weighted average method. What is the value of inventory on January 10 (after the
sale)?
a. $825
b. $975
c. $600
d. $750 - Answer $825
First, determine the weighted average cost of the inventory:
((100*4.50)+(200*6))/300 = 5.50/unit (this is the cost per unit of the items sold)
The denominator of 300 is the total number of units available for sale (100+200).
If the weighted average cost is $5.50/unit and Adventure Industries sold 150 units then total
COGS is $825.
The balance in inventory at the beginning of the year is $450 (100*$4.50).
The balance in inventory on January 5 is $450 + what was purchased on that date, or $1,200
(200*$6). So the new total in inventory is 450+1200 = 1650.
We calculated that the cost of inventory sold (COGS) was $825. So on January 10, the balance in
inventory is 1,650 - 825 = 825.
Harmony Inc. had beginning inventory of 500 units at a cost of $9/unit. Harmony purchased 100
units on January 3 for $8/unit. On January 8, it purchased 200 units for $8.50/unit. What is
Harmony's total goods available for sale?
a. $4,500
b. $2,500
c. $7,000
d. $2,000 - Answer $7,000
Questions and Actual Answers 2025-
2026 Updated.
In periods of rising prices, the FIFO method would result in higher net income than LIFO.
True
False - Answer True
Jasmine Company began the month with 50 units in inventory worth $500. On January 12
Jasmine bought 100 units of inventory for $1,200 on account. On January 18, Jasmine sold 125
units of inventory for $15/unit. If Jasmine uses LIFO, what amount of COGS will be recognized
under the perpetual inventory system?
a. $1,450
b. $1,400
c. $1,875
d. $1,416 - Answer $1,450
Trade Tractors purchased the following tractors during the year:
Red tractor $100,000
Blue tractor $80,000
Green tractor $60,000
Yellow tractor $75,000
Assume Trade Tractors uses the specific identification method. If Trade Tractors only had the
Yellow tractor left in its ending inventory and sales for the year totaled $350,000, what is Trade
Tractors gross profit for the year?
a. $110,000
b. $240,000
c. $275,000
, If the only tractor left in ending inventory is the Yellow tractor, that means the other tractors
were sold during the year. Total COGS = 100 + 80 + 60 = 240
350,000 - 240,000 = 110,000
Adventure Industries began the year with 100 units at $4.50/unit. On January 5, it purchased
200 units at $6/unit. On January 10, Adventure sold 150 units for $7/unit. Adventure Industries
uses the weighted average method. What is the value of inventory on January 10 (after the
sale)?
a. $825
b. $975
c. $600
d. $750 - Answer $825
First, determine the weighted average cost of the inventory:
((100*4.50)+(200*6))/300 = 5.50/unit (this is the cost per unit of the items sold)
The denominator of 300 is the total number of units available for sale (100+200).
If the weighted average cost is $5.50/unit and Adventure Industries sold 150 units then total
COGS is $825.
The balance in inventory at the beginning of the year is $450 (100*$4.50).
The balance in inventory on January 5 is $450 + what was purchased on that date, or $1,200
(200*$6). So the new total in inventory is 450+1200 = 1650.
We calculated that the cost of inventory sold (COGS) was $825. So on January 10, the balance in
inventory is 1,650 - 825 = 825.
Harmony Inc. had beginning inventory of 500 units at a cost of $9/unit. Harmony purchased 100
units on January 3 for $8/unit. On January 8, it purchased 200 units for $8.50/unit. What is
Harmony's total goods available for sale?
a. $4,500
b. $2,500
c. $7,000
d. $2,000 - Answer $7,000
