10. In a period of rising prices, the FIFO method of costing inventory results in income tax savings for companies.  Select one: True False   11. When prices increase, FIFO reports higher gross profit and net incomethan LIFO. Select one: True False 12. A debit memo represents a decrease to accounts payable and therefore results in less money owed to the seller. Select one: True False

Q: O In the case of flat-rate write-offs on receivables, the sales tax must also be corrected. O All…

A: Production cost refers to the expenses involved while producing a certain product.

Q: This year your company has purchased less expensivemerchandise inventory but has not changed its…

A: Gross Profit is a difference between Net sales and Cost of goods sold. The formula for calculating…

Q: Proponents of the LIFO Inventory cost flow assumption argue that this costing method is superior to…

A: LIFO is one of the inventory methods used to account for inventory. Here the inventory of the…

Q: Yellow Corporation has a deficit in accumulated E & P of $600,000 and has a current E & P of…

A: We determine Eugene's tax consequences by analyzing the distribution using Earnings and Profits (E…

Q: Identify the correct statement from the following if, cost of inventory is greater than its net…

A: Net realizable value seems to be an essential indicator being used in accounting reporting for…

Q: Which one of the following statements is correct concerning a factor that influences the length of…

A: This is related to the credit policies of a company. A company's credit policy depends on several…

Q: Consider the following scenarios: Case A: The company capitalized costs to inventory that should not…

A: The accounting policies like methods for inventory valuation, depreciation method, valuation of…

Q: Which of the following may motivate managers to decrease the size of the allowance for doubtf Place…

A: Allowance for Bad debt is provision made for estimated uncollectible debt in the books of accounts.…

Q: 6. Assume inventory costs are increasing over time. a. Will FIFO or LIFO lead to higher Cost of…

A: The inventory can be valued using various methods as LIFO, FIFO and weighted average.  LIFO stands…

Q: Like many technology companies, TechnoTools operates in an environment of decliningprices. Its…

A: The last in, first-out (LIFO) is a system utilized to store reports of the latest items first…

Q: Which of the following is not a disadvantage of using the FIFO cost flow assumption? includes all…

A: Lets understand the basics.There are various methods follow to calculate inventory balance. It…

Q: In the Excel, or spreadsheet, approach to recording financial transactions, the cost of goods sold…

A: The question is based on the concept of financial modeling by the use of excel or spreadsheet. The…

Q: Which of the following statements are true? Multiple Cholce none of the statements are true The…

A: The 2 statement is not true, as higher the number of days sales in receivable indicates that the…

Q: Explain whether the following situations, taken independently, would be favorable or unfavorable: (…

A: Favorable is the condition that is positive for a business. This implies that the variance or the…

Q: 1 The use of alternative accounting methods will result in a lower price-earnings ratio. A: True B:…

A: Accounting methods:- An accounting methods are defined as those methods, which can be adopted by…

Q: ending inventory increases therefore net income under AC and VC will be same Select one: True False

A: The income statement can be prepared using various approaches as contribution margin or absorption…

Q: Margin of Safety (MOS) in dollars indicates how much sales must decrease before the company will be…

A: Margin of safety is the excess of actual revenue over its break even revenue.

Q: Application of the lower-of-cost-or-market rule results in inconsistency because a company may value…

A: Lower of Cost or market rule states that while estimating value of the company's Inventory it is…

Q: Sales Returns Which of the following statements is true relating to the allowance for sales returns?…

A: Sales return & allownace :— It is the amount of goods returned by customer due to receive of…

Q: physical flow of inventory

A: Inventory valuation is essential for any business to figure out the correct net income and balance…

Q: During a period of rising inventory prices, a company's cost of goods sold would be higher using the…

A: LIFO means last in first out where as FIFO means first in first out.Inventory and cost of goods sold…

Q: A negative trend in Gross Margin may indicate that Cost of Sales is decreasing.  Group of answer…

A: Introduction: Formula: Gross margin = sales - cost of goods sold. Deduction of cost of goods sold…

Q: The incomplete income statement of Bramble Corp. follows. Sales revenue Cost of goods sold Gross…

A: Income Statement:Which is a part of financial statement shows the income and expenses for the…

Q: Identify which of the statements below are true (T) or false (F). Lean businesses aim to: Reduce…

A: Lean businesses aim to: Reduce inventory levels--true

Q: Which of the following is an example of a conservative accounting practice? a. Estimate the…

A: Introduction:   Conservative accounting practices refers to the accounting practices which tend to…

Q: Assuming rising inventory prices, which statement is correct? Group of answer choices A. FIFO…

A: INTRODUCTION: First in, first out, or FIFO, is a technique of valuing assets or inventories. The…

Q: total revenue indutry revenue Cost of goods sold Gross Profit Operating Expenses Operating Profit…

A: The purpose of financial analysis is to determine the company's performance by analyzing financial…

Q: 4 5 6 7 All of the following statements are correct about a multiple-step income statement except:…

A: 4. ans.   It provide less information than a single step income statement. ( Explanation: multiple…

Q: Times Interest Earned Ratio A1 Compute the times interest earned ratio and use it to analyze…

A: Here in this question, we are required to calculate the times interest earned ratio. Times interest…

Q: During periods of declining prices, when comparing LIFO and FIFO inventory methods:   A. LIFO…

A: FIFO is first in first out inventory valuation method which says that inventory which is purchased…

Q: Assuming everything else constant, which of the following will NOT make net profit margins increase?…

A: The objective of the question is to identify which of the given scenarios will not lead to an…

Q: r = discount rate C = net cash flow (the profit) at time t (The initial cost of ac- quiring a…

A: The net present value of a series of cashflow can be defined as the sum of present values of the…

Q: If a company has three lots of products for sale, purchase 1 (earliest) for $17, purchase 2 (middle)…

A: Deflationary cost pattern means where prices are falling continuosly.

Q: Wilco Inc. is seeking new ways to expand sales. Mike Norvell, Executive Vice President of Sales,…

A: In the pursuit of business growth and increased revenue, companies often explore various strategies…

Q: ts) An auditor recently asked an accounting manager to perform a LCM test on a batch of inventory.…

A: Valuation of Inventory: The lower of cost or market (LCM) approach stipulates that when valuing a…

Q: Sales returns and allowances increasing by a greater amount than sales revenues can cause confusion…

A: Sales is the amount earned either by selling goods or services. It is the primary activity…

Q: How can accounting keep up with the rising sales return rates, especially when it comes to inventory…

A: Management of inventories: Inventory management may be characterized as a system for measuring and…

Q: The equation for Gross Profit is "Gross Profit = Revenues - Cost of Goods." Which of the following…

A: Gross income is direct income of a business generated from direct revenues of the company. It is an…

Q: If a company is using the lower-of-cost-or-market rule and a write-down is required, how will that…

A: Cost of ending inventory (asset) can be decreased as an adjustment.   An adjusting entry needs to be…

Q: S3. True or False A higher quality of earnings ratio indicates that it is less likely that the…

A: The quality of earnings ratio is a financial metric that assesses the degree to which a company's…

Q: A company follows the LIFO inventory method and is experiencing rising costs. What impact will this…

A: When a company follows the LIFO inventory method and experiences rising costs, the ending inventory…

Inventory Valuation

Before discussing the topic inventory valuation let’s discuss the meaning of inventory. In accounting, inventory is also known as stock. Inventory means all the finished goods, materials, merchandise that a business holds for the purpose of selling it in the market with the motive of earning profit.