Question

Bryer Company has used the FIFO method of valuing its inventory for the prior 12 years. The accountants at Bryer Company would like to switch to LIFO since the economy is suffering from severe inflation. For the switch to occur Bryer Company must have its auditor's approval and place a note in its financial statements, also, the auditor must refer to the change in its audit opinion. Bryer Company cannot make a change to its inventory valuation method once a method is chosen. Bryer Company must remain consistent with or without placing a note in the financial statements. Bryer Company must remain consistent with or without auditor approval. Bryer Company must remain consistent and keep LIFO in place for a minimum of 15 years. QUESTIONS In a transaction where the merchandise invoice indicates F.O.B. shipping point, who pays the cost of shipping? The freight forwarder The common carrier The seller The buyer None of the above QUESTION 10 The lower-of-cost-or-market practice is based on the consistency principle. reliability principle. conservatism principle. entity concept. historical cost concept.

Answer 1

option (1) is correct. Bryer Company must-have its auditor's approval and place a note in its financial statements, also, the auditor must refer to the change in its audit opinion. FOB shipping point stands for free on Board shipping point. e The seller is responsible only till the shipping point All risks and expenses post that are to be born by the buyer. option (4) The buyer" correct. G-to; option 's' conservatism principle Conseratism principle states that anticipated expenses should be recognized but not revenues. Hence, the value of inventory is recognized at lower of cost or market value. Historical concept states that historical cost should be used.

Table 73 8 units unit cost total cost Date 1. Activity Beg inventory 100 3.00 300 3. no nu 3.10 purchase purchase 3. 20 160 Go 3.30 198 30. purchase 250 182 goods available for sale Less units sold units in ending inventory 250 160 90 average cost 784 90 value of ending = 3.63 inventory 90x3.13 = 281.70 Option. It is correct Option 22' is correct. The purchases account is used under both the periodic and perpetual inventory systems.