ACCT 3007 CHAPTER 6 SB FINAL EXAM
2026 QUESTIONS WITH ANSWERS GRADED
A+ COMPLETE SOLUTIONS
●● When does the cost of inventory become an expense?.
Answer: When the inventory is sold
●● What are the 3 steps that firms follow to assign a value to ending
inventory and cost of goods sold.
Answer: - 1. Determine the number of units that firm owns and the
number of units sold
- 2. Determine which costs should be assigned to each physical unit that
was "available for sale"
- 3. Adopt a cost flow assumption to be used as the basis to assign
inventory costs to units
●● FOB shipping point.
Answer: Ownership exchanges at shipping point.
(BUYERS responsible for shipping and damages during shipping)
●● FOB Destination.
Answer: Ownership exchanges at destination.
,(SELLERS responsible for shipping and damages during shipping)
●● What happens with consigned goods.
Answer: - Inventory shows up on Consigner's balance sheet
- Consigner records sales when consignee sold the goods
- Consignee gets proceeds for services
●● Consigner.
Answer: A person who wants to sell something and owns it but has a
consignee sell the product for them.
●● What factors make up the cost for inventory.
Answer: Any cost associated to obtaining the inventory
(includes the cost to purchase the inventory and delivery)
●● What are the 3 cost flow assumptions.
Answer: FIFO, LIFO, weighted average
●● Does cost flow assumption need to be the same as the actual physical
flow of inventory?.
, Answer: NO. The cost flow assumption CAN DIFFER from the actual
physical flow of inventory
●● FIFO stands for.
Answer: First in, First out
●● What is FIFO cost flow assumption.
Answer: Assumes the oldest inventory is sold first (use the old before
the new)
●● LIFO stands for.
Answer: Last in, first out
●● What is LIFO cost flow assumption.
Answer: Assumes that newer inventory is sold first (use the new before
the old)
●● What is weighted average cost flow assumption.
Answer: Uses a uniform cost per unit to COGS and ending inventory by
taking the total cost of all inventory divided by total units available for
sale.
●● Does the total amount of all units available for sale change between
cost flow assumption methods?.
2026 QUESTIONS WITH ANSWERS GRADED
A+ COMPLETE SOLUTIONS
●● When does the cost of inventory become an expense?.
Answer: When the inventory is sold
●● What are the 3 steps that firms follow to assign a value to ending
inventory and cost of goods sold.
Answer: - 1. Determine the number of units that firm owns and the
number of units sold
- 2. Determine which costs should be assigned to each physical unit that
was "available for sale"
- 3. Adopt a cost flow assumption to be used as the basis to assign
inventory costs to units
●● FOB shipping point.
Answer: Ownership exchanges at shipping point.
(BUYERS responsible for shipping and damages during shipping)
●● FOB Destination.
Answer: Ownership exchanges at destination.
,(SELLERS responsible for shipping and damages during shipping)
●● What happens with consigned goods.
Answer: - Inventory shows up on Consigner's balance sheet
- Consigner records sales when consignee sold the goods
- Consignee gets proceeds for services
●● Consigner.
Answer: A person who wants to sell something and owns it but has a
consignee sell the product for them.
●● What factors make up the cost for inventory.
Answer: Any cost associated to obtaining the inventory
(includes the cost to purchase the inventory and delivery)
●● What are the 3 cost flow assumptions.
Answer: FIFO, LIFO, weighted average
●● Does cost flow assumption need to be the same as the actual physical
flow of inventory?.
, Answer: NO. The cost flow assumption CAN DIFFER from the actual
physical flow of inventory
●● FIFO stands for.
Answer: First in, First out
●● What is FIFO cost flow assumption.
Answer: Assumes the oldest inventory is sold first (use the old before
the new)
●● LIFO stands for.
Answer: Last in, first out
●● What is LIFO cost flow assumption.
Answer: Assumes that newer inventory is sold first (use the new before
the old)
●● What is weighted average cost flow assumption.
Answer: Uses a uniform cost per unit to COGS and ending inventory by
taking the total cost of all inventory divided by total units available for
sale.
●● Does the total amount of all units available for sale change between
cost flow assumption methods?.
