Test Your Knowledge - Inventory & Cost Accounting

What is the primary purpose of inventory accounting?

To track the movement of goods in and out of inventory
To calculate gross profit
To determine the cost of goods sold

What is FIFO in inventory cost accounting?

First In, First Out
First In, Last Out
Last In, First Out

Which of the following is true regarding LIFO (Last In, First Out) method?

The most recent inventory purchased is sold first
The oldest inventory purchased is sold first
LIFO is only used for tax purposes

What does "Cost of Goods Sold" (COGS) represent in accounting?

The total cost of producing a product
The total cost of goods that were sold during a period
The total revenue from the sale of products

Which of the following methods uses weighted average to determine inventory cost?

FIFO
LIFO
Weighted Average Cost

What is the purpose of a periodic inventory system?

To continuously track inventory levels in real-time
To update inventory levels at the end of each accounting period
To eliminate the need for inventory reconciliation

In cost accounting, fixed costs are:

Costs that vary with production levels
Costs that do not change with production levels
Only incurred at the beginning of a production run

What is a "stock-out" in inventory management?

A situation where inventory exceeds demand
A situation where there is insufficient stock to meet demand
A situation where inventory is valued incorrectly

What is the main difference between direct and indirect costs in cost accounting?

Direct costs can be traced directly to a product; indirect costs cannot
Indirect costs are only fixed; direct costs are variable
Indirect costs are always higher than direct costs

In inventory management, what is "reorder point"?

The minimum stock level at which new inventory should be ordered
The point at which inventory reaches its maximum level
The time it takes to replenish inventory

Test Your Knowledge - You have 10 questions!