Blake Company purchased two identical inventory items. The item purchased first cost $19.00, and the item purchased second cost $20.00. Blake sold one of the items for $34.00. Which of the following statements is true? Multiple Choice O O O O The dollar amount assigned to ending inventory will be the same matter which inventory cost flow method is used. Cost of goods sold will be higher if Blake uses the FIFO rather than the weighted-average inventory cost flow method. Ending inventory will be lower if Blake uses the weighted-average rather than the FIFO inventory cost flow method. Gross margin will be higher if Blake uses LIFO rather than the FIFO inventory cost flow method.
Blake Company purchased two identical inventory items. The item purchased first cost $19.00, and the item purchased second cost $20.00. Blake sold one of the items for $34.00. Which of the following statements is true? Multiple Choice O O O O The dollar amount assigned to ending inventory will be the same matter which inventory cost flow method is used. Cost of goods sold will be higher if Blake uses the FIFO rather than the weighted-average inventory cost flow method. Ending inventory will be lower if Blake uses the weighted-average rather than the FIFO inventory cost flow method. Gross margin will be higher if Blake uses LIFO rather than the FIFO inventory cost flow method.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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- There are various methods of Inventory Valuation for example: FIFO, LIFO, Weighted Average etc.
- Different Entities choose different methods as per their nature & policies of the business.
- The Value of Inventory, Cost of Goods Sold and Gross Margins vary under the different methods.
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