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Choose true options with short explanation. tagging. cost account

In a single period inventory model, it is optimal to order MORE than the expected demand if the cost of having a shortage is greater than the cost of having a surplus. True False

Which of the following statements is NOT true of Economic Order Quantity? O A. The economic order quantity mathematically determines the minimum total inventory cost B. The EOQ is directly proportional to the sales per period O C. The optimal order size is determined by the EOQ model D. The EOQ ignores inventory reorder costs and inventory carrying costs

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Which of the following statements is correct? Group of answer choices A)The choice of an inventory costing method is dependent upon the actual physical flow of the inventory. B)LIFO should be used during a period of increasing prices when the objective is to maximize the ending inventory value on the balance sheet. C)FIFO should be used during a period of decreasing prices when the objective is to maximize the gross profit reported on the balance sheet. D)The average cost method will result in an ending inventory balance which is somewhere between LIFO and FIFO when inventory prices are changing.

An advantage of the weighted average inventory method is that it smooths out erratic changes in costs. True or False True False

Explain the lower of cost and net realizable value approach to valuing inventory.

Proponents of the LIFO Inventory cost flow assumption argue that this costing method is superior to the alternatives because it results In better matching of revenue and expense. Required: a. The recent purchase costs to the Cost of Goods Sold account results in better matching of revenue and expense. O True False b. What is the impact on the carrying value of Inventory in the balance sheet when LIFO rather than FIFO is used during periods of Inflation? O It understates the value of Inventory in the balance sheet. O It overstates the value of Inventory in the balance sheet.

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Explain the lower of cost or market rule for inventory valuation and explain why it is GAAP.

The Quick Ratio is often use in conjuction with the current ratio because A It is easier to calculate B It considers the use of inventory C It does not consider inventory which is often the least liquid current asset D It is more reliable then the Acid Test

Which of the following statements regarding the lower of cost and net realizable value (LCNRV) rule is true? a.The LCNRV rule is an application of the cost principle. b.When the net realizable value of inventory drops below the cost of inventory, an adjustment is made to decrease inventory to its net realizable value and decrease income. c.If a company uses the LCNRV rule, there is no need to use a cost flow assumption such as FIFO, or weighted average cost. d.When the net realizable value of inventory is above the cost of inventory, an adjustment is made to increase inventory to its net realizable value and increase income.

Ward Hardware does not expect costs to change dramatically and wants to use an inventory costing method that averages cost changes. Requirements 1. Which inventory costing method would best meet Ward's goal? 2. Assume Ward wanted to expense out the newer purchases of goods instead. Which inventory costing method would best meet that need? Requirement 1. The inventory costing method that averages cost changes is the: O A. Last-in, first-out (LIFO) cost method O B. Weighted-average method OC. First-in, first-out (FIFO) cost method O D. Specific identification method Requirement 2. The inventory costing method that expenses out the newer purchases of goods is the: O A. Last-in, first-out (LIFO) cost method B. Weighted-average method Oc. Specific identification method O D. First-in, first-out (FIFO) cost method