Blake Company Purchased Two Identical Inventory Items

question 10

Multiple Choice

Blake Company purchased two identical inventory items. The item purchased first cost $19.00, and the item purchased second cost $20.00. Blake sold one of the items for $34.00. Which of the following statements is true?

• A)Ending inventory will be lower if Blake usesthe weighted-average rather than the FIFO inventory cost flow method.
• B)Cost of goods sold will be higher if Blake uses the FIFO rather than the weighted-average inventory cost flow method.
• C)The dollar amount assigned to ending inventory will be the same no matter which inventorycost flow method is used.
• D)Gross margin will be higher if Blake uses LIFO rather than the FIFO inventory cost flow method.

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Definitions:

Contractual Clause

A provision included in a contract that specifies a particular requirement, obligation, or condition affecting the agreement's parties.

Specific Performance

A court order to perform the exact terms of a contract, rather than paying damages for failing to meet the terms.

Commercial Impracticability

A legal doctrine that excuses a party from performing its contractual obligations due to unforeseen events that make performance exceedingly difficult or expensive.

Earthquake

A natural phenomenon characterized by the shaking of the earth's surface, typically resulting from the movement of tectonic plates beneath the earth's crust.