Barker Company Paid Cash to Purchase Two Identical Inventory Items

question 68

Multiple Choice

Barker Company paid cash to purchase two identical inventory items.The first purchase cost $18.00 cash and the second cost $20.00 cash.Barker sold one inventory item for $30.00 cash.Based on this information alone,without considering the effect of income taxes,which of the following statements is correct?

• A)Cash flow from operating activities is $11.00 assuming the weighted-average inventory cost flow method is used.
• B)Cash flow from operating activities is $12.00 assuming the FIFO inventory cost flow method is used.
• C)Cash flow from operating activities is $10.00 assuming the LIFO inventory cost flow method is used.
• D)The amount of cash flow from operating activities is not affected by the inventory cost flow method chosen.

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Definitions:

Single Entity

A business or organization that is legally recognized as a single unit, distinct from its owners or shareholders.

Exporting

The act of sending goods or services to another country for sale.

Foreign Markets

Markets outside the domestic borders where companies can expand their operations and sales.