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22 Terms

1
LIFO
Results in cost of goods sold being closest to current product costs.
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2
FIFO
Results in highest income during periods of inflation.
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3
FIFO
Results in highest ending inventory during periods of inflation.
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4
Weighted Average
Smooths out (or evens out) costs during periods of inflation.
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5
Specific Identification
Is not practical for many businesses.
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6
Weighted Average
Puts more emphasis or significance on the unit cost of the larger number of units purchased.
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7
Jayhawk Company
Shipped merchandise to Wildcat Corporation on December 28, 2022, FOB destination; ownership remains with Jayhawk.
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8
Cowboy Company
Received merchandise from Sooner, Inc. on December 31, 2022, FOB destination; ownership is with Cowboy.
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9
Razorback, Inc.
Received merchandise from Tiger Corporation on January 3, 2023, FOB shipping point; ownership is with Razorback.
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10
Inventory understated
From the buyer’s perspective, goods in transit at year end not included in the physical count (FOB shipping point).
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11
Cost of Goods Sold overstated
From the buyer’s perspective, goods in transit at year end not included in the physical count (FOB shipping point).
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12
Net Income understated
From the buyer’s perspective, goods in transit at year end not included in the physical count (FOB shipping point).
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13
Stockholders’ Equity understated
From the buyer’s perspective, goods in transit at year end not included in the physical count (FOB shipping point).
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14
Inventory overstated
One section of a warehouse counted twice; leads to Cost of Goods Sold understated.
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15
Net Income overstated
One section of a warehouse counted twice; leads to Inventory overstated.
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16
From the seller’s perspective
Goods in transit at year end included in physical count (FOB shipping point).
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17
Inventory overstated
From the seller's perspective; leads to Cost of Goods Sold understated.
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18
Net Income overstated
From the seller's perspective; leads to Inventory overstated.
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19
Inventory sheets lost
During count at year-end; leads to Inventory understated.
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20
Cost of Goods Sold overstated
In case of lost inventory sheets during year-end count.
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21
Net Income understated
In case of lost inventory sheets during year-end count.
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22
Stockholders’ Equity understated
In case of lost inventory sheets during year-end count.
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