Task Team of FUNdaMENTAL aCCOUNtIng School of Business. Sun Yat-sen University B LIFO C FIFo D. Average cost 1. During a period of steadily rising prices, which of the following methods of measuring the cost of goods sold is likely to result in reporting the highest gross profit? A FIFO B LIFO C. Specific identification D. Average cost 12. During a period of steadily falling prices, which of the following methods of measuring the cost of goods sold is likely to result in reporting the highest gross profit? A. Specific identification. B. Average cost C. LIFO D. FIFO 13. In a period of rising prices, a company is most likely to use the specific identification method of pricing inventory if A. Each item in the inventory is unique B. Management wants the same unit cost assigned to items sold and items remaining in inventory C Managements primary objective is to minimize income taxes D. Management wants the company's income statement to indicate the highest possible amounts of gross profit and net income 14. As a result of taking an annual physical inventory, it usually is necessary in a perpetual inventory system to make an entry A. Reducing assets and increasing the cost of goods sold B Reducing assets and increasing liabilities C. Reducing the cost of goods sold D. None of the above, a physical inventory usually does not indicate the need for any entries in the accounting record 15. The logic behind the lower-of-cost-or-market rule is: A Inventory gradually becomes obsolete B. Iny alue) C. An asset is not worth more than it would cost the owner to replace it D Inventory which is unsalable should be written down to its replacement cost 16. If goods are shipped FO B shipping point, which party to the transaction is normally responsible for the shipping charges? A. The seller B. The buyerTask Team of FUNDAMENTAL ACCOUNTING School of Business, Sun Yat-sen University 3 B. LIFO. C. FIFO. D. Average cost. 11. During a period of steadily rising prices, which of the following methods of measuring the cost of goods sold is likely to result in reporting the highest gross profit? A. FIFO. B. LIFO. C. Specific identification. D. Average cost. 12. During a period of steadily falling prices, which of the following methods of measuring the cost of goods sold is likely to result in reporting the highest gross profit? A. Specific identification. B. Average cost. C. LIFO. D. FIFO. 13. In a period of rising prices, a company is most likely to use the specific identification method of pricing inventory if: A. Each item in the inventory is unique. B. Management wants the same unit cost assigned to items sold and items remaining in inventory. C. Management’s primary objective is to minimize income taxes. D. Management wants the company’s income statement to indicate the highest possible amounts of gross profit and net income. 14. As a result of taking an annual physical inventory, it usually is necessary in a perpetual inventory system to make an entry: A. Reducing assets and increasing the cost of goods sold. B. Reducing assets and increasing liabilities. C. Reducing the cost of goods sold. D. None of the above; a physical inventory usually does not indicate the need for any entries in the accounting records. 15. The logic behind the lower-of-cost-or-market rule is: A. Inventory gradually becomes obsolete. B. Inventory which is unsalable should be written down to zero (or its scrap value). C. An asset is not worth more than it would cost the owner to replace it. D. Inventory which is unsalable should be written down to its replacement cost. 16. If goods are shipped F.O.B. shipping point, which party to the transaction is normally responsible for the shipping charges? A. The seller. B. The buyer