A. The balance sheet figure is between the LIFO and FIFO figures.
It cab be understand by the following example
Date | Units | Rate | Total | |
May 01 | Beginning inventory | 19,000 | $7.50 | $142,500 |
May 07 | Purchase | 26,000 | $9.00 | $234,000 |
May 25 | Purchase | 31,000 | $11.00 | $341,000 |
Aug 01 | Purchase | 21,500 | $12.00 | $258,000 |
Nov 10 | Purchase | 31,000 | $13.50 | $418,500 |
Units available for sale | 128,500 | $1,394,000 | ||
Ending Inventory | 15,000 | |||
LIFO | Units | Rate | Ending Inventory | |
15,000 | $7.50 | $112,500 | ||
Weighted Average Cost basis | Units | Rate | Ending Inventory | |
Cost per unit = $1,394,000/128,5000 = $10.85 | ||||
15,000 | $10.850 | $162,750 | ||
FIFO | Units | Rate | Ending Inventory | |
15,000 | $13.50 | $202,500 |
Which of the following statements about the use of the weighted average assumption is true? Select...
Effect of inventory cost flow assumption on financial statements Required For each of the following situations, indicate whether FIFO, LIFO, or weighted average applies: a. In a period of falling prices, net income would be highest. b. In a period of falling prices, the unit cost of goods would be the same for ending inventory and cost of goods sold. c. In a period of rising prices, net income would be highest. d. In a period of rising prices, cost...
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...
Is this correct? Which of the following statements about the current ratio is NOT true? Select one: A.the current ratio indicates whether the company has enough short-term assets to cover its short-term debts B.an extremely high ratio is always a favourable sign C.a ratio above 1 indicates that working capital is positive D.none of the above O
QUESTION 4 8 points Save Answer Company A uses LIFO and Company B uses FIFO. Assume rising prices. In analyzing liquidity and profitability of the two firms, which of the following statements is true? Company B will have higher owners' equity. Company A will have lower cost of goods sold Company A will have higher liabilities. Company B will have lower income tax payments. It is impossible to say anything about the two firms since they use different inventory methods....
Question 14 Which of the following statements about inventories is true? During inflation LIFO inventory accounting tends to overstate the current ratio O FIFO inventory balances generally contain old and outdated costs that have little or no relationship to current costs OUS generally accepted accounting principles (GAAP) require the use of lower of cost or market valuation basis for inventories Last-In, First-Out (LIFO) inventory accounting makes management of income more difficult than First-In First-Out (FIFO) accounting Moving to another question...
5. In the pro-forma income statements that James Colburn prepared for Rick Martino, the costs of the reel mower units and transportation were rising for 2007 and 2008. Discuss how the balance sheet and income statement would be affected if Merrimack changed from LIFO to FIFO and inventory purchase prices and transportation costs had been stable over the two-year period. What would happen to the income statement and balance sheet if Merrimack changed from LIFO to FIFO and inventory purchase...
Answer the following as True or False, then select the correct multiple-choice answer: _____ The periodic inventory method requires an adjusting entry for a loss at the end of the period. _____ In periods of declining prices, periodic FIFO will have a lower net income than periodic LIFO. _____ The gross profit method of estimating inventory can be used as a substitute for a physical inventory count under the periodic inventory method. A. True, True, True B. False, False, False...
Which of the following statements about explicit costs is true? Select one: a. They are the only costs that matter to business owners b. They usually exceed implicit costs. Oc. They are difficult to measure. O d. They appear on the firm's balance sheet.
15. If merchandise is sold on account to a customer for $4,000, terms FOB shipping point, 1/10, n/30, under perpetual system, the amount credited to the Sales Revenue account would be a. $4,000 b. $3,960 e. 53,600 d. $40 16. Cost of goods sold if found by using the cost of newest items when a company uses: a LIFO b FIFO c Weighted average cost d. Specific identification 17. In a period of inflation (unit prices rising over time), which...
The cost of units completed can differ materially between the weighted average and the FIFO methods of process costing. II. Weighted-average cost per equivalent unit includes the costs for beginning work in process plus costs for work done in the current period. III. The FIFO process costing method assigns (or keeps) the cost of work done on beginning inventory separate from the cost of work done during the current period. IV. A major advantage of the weighted-average process costing is...