Question 1

Riverside Corp. has the following inventory information using the FIFO method:
- Beginning inventory: 1,000 units at $15 each
- Purchase 1: 2,000 units at $16 each
- Purchase 2: 1,500 units at $18 each
- Purchase 3: 500 units at $20 each
- Units sold: 3,200 units

What is the cost of goods sold under FIFO?

Accepted Answer

Under FIFO, cost of goods sold uses the oldest inventory costs first. Start with beginning inventory, then use purchases in chronological order until reaching the total units sold.

Question 2

What mistakes do candidates make on this CPA question?

Accepted Answer

Using LIFO cost flow instead of FIFO, miscounting units sold, or calculation errors in extensions

How to approach this question

Full Answer

Common mistakes

Practice the full CPA FAR Practice Exam 2

More questions from this exam