ACC 100 - Final Exam 2025/2026 Exam
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Inventory costing methods - 🧠 ANSWER ✔✔These systems assign (give)
costs to each unit of inventory. They also determine the cost of goods sold
(because inventory costs are transferred (moved over) to cost of goods
sold when the inventory is sold to customers)
What are the three inventory costing methods? - 🧠 ANSWER ✔✔The three
different inventory costing methods are as follows:
1. Specific identification
2. Average cost
3. First-in, first-out (FIFO)
Specific identification - 🧠 ANSWER ✔✔The cost of every single item of
inventory is calculated and the item is tagged with the cost. That means
, that, at any time, the cost of every single item of inventory can be
determined. When an item is sold, the cost of that specific item is moved
from the Inventory account (an asset decreases) to Cost of Goods Sold (an
expense because it was used to generate revenue).
Drawbacks to the specific identification method - 🧠 ANSWER ✔✔This
method is expensive and time consuming because the business is required
to keep detailed records. In addition, this method can only be used by
businesses that carry products which are unique or have a method to
identify each item of inventory, like a serial number. For example, car
dealerships can use this method as each car has a unique vehicle
identification number (VIN).
If you sold the green car for $20,000 cash, what would be your entry into
the accounting system using the expanded accounting equation and
account names?. Bought that car for $12,000. - 🧠 ANSWER ✔✔You earned
revenue of $20,000 because you delivered a car to your customer, so
Sales Revenue increases. If your customer paid cash, your Cash account
would increase because you own the cash and it has future benefit for your
business. You also have to reduce your Inventory for the value of the car
that has now been sold, so inventory decreases by $12,000. That car has
Questions and Verified Answers |
Already Graded A+
Inventory costing methods - 🧠 ANSWER ✔✔These systems assign (give)
costs to each unit of inventory. They also determine the cost of goods sold
(because inventory costs are transferred (moved over) to cost of goods
sold when the inventory is sold to customers)
What are the three inventory costing methods? - 🧠 ANSWER ✔✔The three
different inventory costing methods are as follows:
1. Specific identification
2. Average cost
3. First-in, first-out (FIFO)
Specific identification - 🧠 ANSWER ✔✔The cost of every single item of
inventory is calculated and the item is tagged with the cost. That means
, that, at any time, the cost of every single item of inventory can be
determined. When an item is sold, the cost of that specific item is moved
from the Inventory account (an asset decreases) to Cost of Goods Sold (an
expense because it was used to generate revenue).
Drawbacks to the specific identification method - 🧠 ANSWER ✔✔This
method is expensive and time consuming because the business is required
to keep detailed records. In addition, this method can only be used by
businesses that carry products which are unique or have a method to
identify each item of inventory, like a serial number. For example, car
dealerships can use this method as each car has a unique vehicle
identification number (VIN).
If you sold the green car for $20,000 cash, what would be your entry into
the accounting system using the expanded accounting equation and
account names?. Bought that car for $12,000. - 🧠 ANSWER ✔✔You earned
revenue of $20,000 because you delivered a car to your customer, so
Sales Revenue increases. If your customer paid cash, your Cash account
would increase because you own the cash and it has future benefit for your
business. You also have to reduce your Inventory for the value of the car
that has now been sold, so inventory decreases by $12,000. That car has
