The Effects of Financial Statements on Costing Methods

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question 1 of 3

Which price for inventory is used with the FIFO costing method?

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1. Which costing method is used by businesses who want to receive more tax benefits?

2. XYZ Home Improvement sells metal table legs among other things. They have a large inventory of metal table legs for sale. Some of their inventory was purchased from their metal table leg supplier last year for $35 per leg. The cost of these metal table legs has since increased to $40 per leg. XYZ Home Improvement likes their financial reports to show the greatest profit for their shareholders. Which costing method should they use?

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About This Quiz & Worksheet

There are certain effects of financial statements on costing methods. Gauge your knowledge of these effects and types of costing methods by using the quiz and worksheet.

Quiz & Worksheet Goals

You will be tested over:

  • What costing method means
  • A costing method that is more aligned to inflation levels
  • Price for inventory that is used with the FIFO costing method
  • Costing method that is used by companies who want to show more profit during times of inflation
  • A costing method that is used by businesses who want to receive more tax benefits

Skills Practiced

  • Reading comprehension - ensure that you draw the most important information from the lesson on the effects of financial statements on costing methods
  • Knowledge application - use your knowledge to answer questions about the different types of costing methods
  • Interpreting information - verify that you can read information about the meaning of costing method and interpret it correctly

Additional Learning

The lesson called The Effects of Financial Statements on Costing Methods is useful in learning more about these effects. You can also complete these objectives:

  • Determine what a financial statement is
  • Figure out how the costing methods differ from each other
  • Analyze examples of costing methods
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