Nt15

Darlington Company experienced the following business events during its first month of operations. The company uses the perpetual Inventory system. 1) The company purchased $14,400 of merchandise on account under terms 2/10, n/30. 2) The company returned $3,100 of merchandise to the supplier before payment was made. 3) The llability was paid within the discount period. 4) All of the merchandise purchased was sold for $22,600 cash. What is the net cash flow from operating activities as a result of the four transactions? Multiple Choice $11,526 $11,074 $5,100 $8,200

A company follows the LIFO inventory method and is experiencing rising costs. What impact will this have on its financial statements during a period of increasing prices? a b C d Higher cost of goods sold and lower net income Lower cost of goods sold and higher net income. Lower inventory turnover and higher gross profit margin. Higher inventory turnover and lower gross profit margin.

Which statements below are true?  1. LCM and LCNRV may be applied by individual products, by product category or by total inventory. 2. A firm that wants to minimize the negative impact of inventory write-down on net income should apply LCM or LCNRV by individual products. 3. If inventory write-down is usual and not substantial, a firm should debit "Loss on inventory write-down” and credit "Inventory". 4. LCM and LCNRV applied by total inventory will result in higher value of inventory and lower inventory write-down than by individual products, by product category. 5. If inventory write-down is unusual and substantial, a firm should debit "Cost of good sold" and credit "Inventory".

Explain the purpose of the inventory turnover ratio? Is it possible for a firm to have a high current ratio and still have difficulty paying its current bills? Why or why not?

Very high inventory turnover ratio relative to industry norms could possibly indicate the company does not carry adequate inventory, so shortages could potentialy hurt reverue. Select one: True False

What is inventory shrinkage? The difference between product cost and retail selling price. The loss of sales revenue due to lowering sales prices. The discrepancy between the perpetual system generated Inventory level and actual physical inventory on hand. The inaccuracy of vendor invoices regarding what was physically shipped.   What would be the most favorable cost flow assumption method when calculating gross margin in a time of high inflation? FIFO Specific LIFO Average

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.

Explain how the inventory valuation method (LIFO or FIFO) chosen by a company affects the cost of goods sold and net income if prices are rising. What if the prices are declining?

The management of Milque Corp. is considering the effects of inventory-costing methods on its financial statements and its income tax expense. Assuming that the cost the company pays for inventory is increasing, which method will: (a) (b) (c) Provide the highest net income? Provide the highest ending inventory? Result in the lowest income tax expense? 10

When a company's days of inventory on hand are increasing, this might indicate that: O The company is overstating inventory to reduce profits. O The company is expanding. O The company's inventory is obsolete.