ZuoTi.Pro
Question

If a company experiences consistently rising inventory costs, which of the following methods would be best...

If a company experiences consistently rising inventory costs, which of the following methods would be best to use for tax purposes?

FIFO

LIFO

Average cost

Inventory method choice is irrelevant for tax purposes

business   accounting   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1
Option B is the answer
Under lifo, latest units are sold first. Therefore when prices rise, cost of goods sold also increases thereby it would be good for the tax purposes

Comment if you face any issues

0 0
Add a comment
Know the answer?
Add Answer to:
If a company experiences consistently rising inventory costs, which of the following methods would be best...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • in a period of rising prices, which of the following inventory methods results in the lowest...

    in a period of rising prices, which of the following inventory methods results in the lowest net income? 1. Specific identification method 2. FIFO 3. LIFO 4. Weighted average cost Explain the answer in detail.

  • Which of the following statements on inventory turnover is incorrect? a. Inventory turnover is equal to...

    Which of the following statements on inventory turnover is incorrect? a. Inventory turnover is equal to the cost of goods sold divided by average inventory. b. When costs are rising, inventory turnover under LIFO will be lower than under FIFO. c. When costs are decreasing, inventory turnover under LIFO will be lower than under FIFO. d. When costs are rising, inventory turnover under LIFO will be higher than under FIFO. Which of the following statements is incorrect? a.Inventory write-offs decrease...

  • 1. Which of the following reduces a company's inventory cost? A. Sales Discounts B. Freight-In C....

    1. Which of the following reduces a company's inventory cost? A. Sales Discounts B. Freight-In C. Freight-Out D. Purchase Discounts E. Bad Debt Expense 3. Which of the following statements is true for companies that use the LIFO method for income tax purposes in the United States? A. They must use the FIFO method for financial statement purposes. B. They are permitted to use any of the inventory costing methods for financial statement purposes. C. They must use the LIFO...

  • If inventory is being valued at cost and the price level is steadily rising, which of...

    If inventory is being valued at cost and the price level is steadily rising, which of the following three methods of costing—FIFO, LIFO, or weighted average cost—will yield the lowest annual after tax net income? Which method will yield the highest after tax net income in a scenario where the price level is steadily declining? Which of the three methods of inventory will in general yield an inventory cost most nearly approximating current replacement cost?

  • In a period of rising costs, which inventory valuation method would a company likely choose if...

    In a period of rising costs, which inventory valuation method would a company likely choose if they want to have the highest possible balance of inventory on the balance sheet? Weighted-average cost.                                        B) FIFO. C) LIFO.                                                                    D) Periodic. Which of the following is a negative sign that a company is not selling its inventory quickly? A high inventory turnover ratio. Both a high inventory turnover ratio and a low average days in inventory. A low average days in inventory. A...

  • Courtney Company uses a periodic inventory system. The following data were available: beginning inventory, 1,500 units...

    Courtney Company uses a periodic inventory system. The following data were available: beginning inventory, 1,500 units at $25; purchases, 3,000 units at $28; operating expenses (excluding income taxes), $94,000; ending inventory per physical count at December 31, 1,000 units; sales price per unit, $75; and average income tax rate, 30%. Prepare income statements under the FIFO, LIFO, and weighted average costing methods. PLEASE do not round intermediate calculations but can you round the final answers to the nearest dollar amount...

  • PLEASE explain how to get the answer ? Alternative Inventory Methods Garrett Company has the following...

    PLEASE explain how to get the answer ? Alternative Inventory Methods Garrett Company has the following transactions during the months of April and May: Date Transaction Units Cost/Unit April 1 Balance 300       17 Purchase 200 $5.10       25 Sale 150       28 Purchase 100 5.90 May 5 Purchase 250 5.10       18 Sale 300       22 Sale 50 The cost of the inventory on April 1 is $5, $4, and $2 per unit, respectively, under the FIFO, average, and LIFO cost flow assumptions. Required:...

  • Alternative Inventory Methods Garrett Company has the following transactions during the months of April and May:...

    Alternative Inventory Methods Garrett Company has the following transactions during the months of April and May: Date Transaction Units Cost/Unit April 1 Balance 300       17 Purchase 200 $5.10       25 Sale 150       28 Purchase 100 5.70 May 5 Purchase 250 5.10       18 Sale 300       22 Sale 50 The cost of the inventory on April 1 is $5, $4, and $2 per unit, respectively, under the FIFO, average, and LIFO cost flow assumptions. Required: 1. Compute the inventories at the end of...

  • Complete comparative income statements for the month of January for Laker Company for the four inventory methods. Assume expenses are $1,850 and that the applicable income tax rate is 40%.

    Use the following information for the Exercises below.Skip to question[The following information applies to the questions displayed below.] Laker Company reported the following January purchases and sales data for its only product. DateActivitiesUnits Acquired at CostUnits sold at RetailJan.1Beginning inventory200units@$12.50 =$2,500Jan.10Sales160units@$21.50Jan.20Purchase130units@$11.50 =1,495Jan.25Sales140units@$21.50Jan.30Purchase300units@$11.00=3,300Totals630units$7,295300units The Company uses a perpetual inventory system. For specific identification, ending inventory consists of 330 units, where 300 are from the January 30 purchase, 5 are from the January 20 purchase, and 25 are from beginning inventory.Exercise 5-4 Perpetual: Income effects of inventory...

  • 5) Which of the following inventory costing methods yields the highest income when costs are rising...

    5) Which of the following inventory costing methods yields the highest income when costs are rising during the accounting period? A) Specific-unit-cost B) Average-cost C) Last-In, First-Out D) First-In, First-Out Which of the following inventory costing methods yields the lowest income when costs are rising during the accounting period? A) Specific-unit-cost B) Average-cost C) Last-In, First-Out D) First-In, First-Out

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT