when using FIFO costing during inflationary time period, will the cost of goods be higher or...
when using FIFO costing during inflationary time period, will the cost of goods be higher or lower than when using LILO and how would it affect net income? Higher or lower?
Homework Answers
Answer
--Under FIFO costing method of valuing inventory, the ending inventory is valued at the latest purchase price AND the Cost of Goods Sold is calculated based on earliest purchases.
--Hence, during inflationary time period, the Cost of Goods Sold WOULD BE LOWER.
--This would result in LOWER Cost of Goods Sold and HIGHER value of ending inventory.
--Lower Cost of Goods Sold (Expense) and Higher ending inventory WILL lead to HIGHER GROSS PROFITS.
--Higher Gross Profits = Higher Net Income.
Add Answer to:
when using FIFO costing during inflationary time period, will
the cost of goods be higher or...
When costs to purchase inventory are falling over time, using LIFO leads to reporting ______ cost...
When costs to purchase inventory are falling over time, using LIFO leads to reporting ______ cost of goods sold and ______ net income than FIFO. Multiple Choice lower, lower higher; higher
Remaining Time: 42 minutes, 39 seconds. Question Completion Status: In a deflationary period, choosing FIFO over...
Remaining Time: 42 minutes, 39 seconds. Question Completion Status: In a deflationary period, choosing FIFO over LIFO for inventory costing would affect the financial statements as follows: Cost of goods sold will be higher and ending inventory will be lower Cost of goods sold will be lower and ending inventory will be lower Cost of goods sold will be higher and ending inventory will be higher Cost of goods sold will be lower and ending inventory will be higher Click...
Compute the cost of the ending inventory and the cost of goods sold under FIFO and...
Compute the cost of the ending inventory and the cost of goods sold under FIFO and average-cost. (Round av e.g. NT$45.) FIFO Average cost The cost of the ending inventory NT$U 606,402 NT$1 584,748 The cost of goods sold NT$ 1,732,594 NT$ 1,754,244 Which cost flow method would result in the higher net income? FIFO method would result in the higher net income. SHOW SOLUTION LINK TO TEXT (c) Your answer is correct. Which cost flow method would result yn...
Question 17 (2 points) ✓ Saved During a period of inflation, firms using FIFO will have...
Question 17 (2 points) ✓ Saved During a period of inflation, firms using FIFO will have the Highest cost of goods sold, lowest net income, and lowest ending inventory Lowest cost of goods sold, highest net income, and lowest ending inventory Highest cost of goods sold, lowest net income, and highest ending inventory Lowest cost of goods sold, highest net income, and highest ending inventory
In a period of rising prices, FIFO will result in lower net income than LIFO. lower...
In a period of rising prices, FIFO will result in lower net income than LIFO. lower cost of goods sold than LIFO lower income tax expense than LIFO. lower net purchases than LIFO.
Requirement 1. Compute cost of goods sold and gross profit using the FIFO inventory costing method....
Requirement 1. Compute cost of goods sold and gross profit using
the FIFO inventory costing method.
Begin by computing the cost of goods sold and cost of ending
merchandise inventory using the FIFO inventory costing method.
Enter the transactions in chronological order, calculating new
inventory on hand balances after each transaction. Once all of the
transactions have been entered into the perpetual record,
calculate the quantity and total cost of merchandise inventory
purchased, sold, and on hand at the end...
During a period of inflation, using — will approximate a company's current cost of ending inventory....
During a period of inflation, using — will approximate a company's current cost of ending inventory. O FIFO O both FIFO and the average cost formula the average cost formula the lower of cost and net realizable value
Requirement 1. Compute cost of goods sold and gross profit using the FIFO inventory costing method...
Requirement 1. Compute cost of goods sold and gross profit using the FIFO inventory costing method Begin by computing the cost of goods sold and cost of ending merchandise inventory using the FIFO inventory costing method. Enter the transacions in chronalogical order, calculating news inventory an hand balances ater each transaction Once all of the transacions have been entered into the perpetal record, caloulate the quantly and total oost of merchandise inventory purchased, sold, and on hand at the end...
During a period of decreasing inventory costs (i.e., assume a period of deflation), which inventory costing...
During a period of decreasing inventory costs (i.e., assume a period of deflation), which inventory costing method will show cost of goods sold on the income statement at the most current acquisition costs? FIFO LIFO weighted average all methods will show the same amount of cost of goods sold
In a period of steadily rising prices (meaning the cost to purchase inventory is increasing over time), what would be th...
In a period of steadily rising prices (meaning the cost to purchase inventory is increasing over time), what would be the implications of choosing FIFO vs. LIFO? Which method would show a higher net income, and which would show a lower net income? Which method does a better job of matching expenses and revenues? Which method reflects the most recent costs of inventory on the balance sheet? What implications might this have that would be relevant for users of the...
Remaining Time: 42 minutes, 39 seconds. Question Completion Status: In a deflationary period, choosing FIFO over LIFO for inventory costing would affect the financial statements as follows: Cost of goods sold will be higher and ending inventory will be lower Cost of goods sold will be lower and ending inventory will be lower Cost of goods sold will be higher and ending inventory will be higher Cost of goods sold will be lower and ending inventory will be higher Click...
Compute the cost of the ending inventory and the cost of goods sold under FIFO and average-cost. (Round av e.g. NT$45.) FIFO Average cost The cost of the ending inventory NT$U 606,402 NT$1 584,748 The cost of goods sold NT$ 1,732,594 NT$ 1,754,244 Which cost flow method would result in the higher net income? FIFO method would result in the higher net income. SHOW SOLUTION LINK TO TEXT (c) Your answer is correct. Which cost flow method would result yn...
Question 17 (2 points) ✓ Saved During a period of inflation, firms using FIFO will have the Highest cost of goods sold, lowest net income, and lowest ending inventory Lowest cost of goods sold, highest net income, and lowest ending inventory Highest cost of goods sold, lowest net income, and highest ending inventory Lowest cost of goods sold, highest net income, and highest ending inventory
In a period of rising prices, FIFO will result in lower net income than LIFO. lower cost of goods sold than LIFO lower income tax expense than LIFO. lower net purchases than LIFO.
Requirement 1. Compute cost of goods sold and gross profit using
the FIFO inventory costing method.
Begin by computing the cost of goods sold and cost of ending
merchandise inventory using the FIFO inventory costing method.
Enter the transactions in chronological order, calculating new
inventory on hand balances after each transaction. Once all of the
transactions have been entered into the perpetual record,
calculate the quantity and total cost of merchandise inventory
purchased, sold, and on hand at the end...
During a period of inflation, using — will approximate a company's current cost of ending inventory. O FIFO O both FIFO and the average cost formula the average cost formula the lower of cost and net realizable value
Requirement 1. Compute cost of goods sold and gross profit using the FIFO inventory costing method Begin by computing the cost of goods sold and cost of ending merchandise inventory using the FIFO inventory costing method. Enter the transacions in chronalogical order, calculating news inventory an hand balances ater each transaction Once all of the transacions have been entered into the perpetal record, caloulate the quantly and total oost of merchandise inventory purchased, sold, and on hand at the end...
During a period of decreasing inventory costs (i.e., assume a period of deflation), which inventory costing method will show cost of goods sold on the income statement at the most current acquisition costs? FIFO LIFO weighted average all methods will show the same amount of cost of goods sold
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