2. Shepherd Cycles does not expect prices to change dramatically and wantsto use a method that averages price changes.B. Which inventory method would best meet Shepherd's goal?Enter answer here.C. What if Shepherd wanted to expense out the newer purchases of goodsinstead? Which inventory would best meet that need?Enter answer here.

An inventory valuation allows a business to assign a monetary value to items in its inventory.…

Answered: 2. Shepherd Cycles does not expect…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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3.What is the purpose of the current ratio? Assume that Island Solutions want to compute its current ratio, which inventory method (FIFO or Average Cost) would give a more meaningful current ratio. Explain. 4.Island Solutions has discovered that all of its competitors are using another inventory method and is worried. Can the company change its inventory accounting method, on what grounds? Discuss two (2) trade-offs for the company.
Are you correct that, by using LIFO, Kroger reports lower inventory and lowerprofits? Why would Kroger do that?
Which of the following is an advantage of using a perpetual inventory system A. It is effective with hand written inventory cards B. It is able to detect when errors are made C. It is relatively easy and inexpensive to set up D. It is less time consuming than other methods
The original cost of an item of inventory is above its replacement cost. The item s replacement cost is below its net realizable value but is higher than its net realizable value minus a normal profit. Under the lower of cost or market method, the inventory item should be valued at: a. Net realizable value. b. Original cost. c. Replacement cost. d. Net realizable value less normal profit margin.
4. pricing a product in a market where there is considerable leeway in setting prices IA an example of a
Distinguish between the periodic and perpetual inventory system. Describe the advantages and disadvantages of both a periodic and perpetual system. Select your favorite merchandising company. Discuss which system you believe would be most beneficial for them and why
Inventory Costing Method. In the period of inflation, businesses will choose to use LIFO, whereas, during the deflation period, they will pick FIFO instead if they want to have the lowest income tax. Why is that?
What factors might impact on the management’s selection of an inventory cost flow assumption? In your answer you need to provide explanation on what factors could impact on a manager to choose FIFO, LIFO or the average cost method. In your answer you may want to refer to issues such as the impact of various cost flow assumptions on the income statement or the statement of financial position. List four factors in your answer
Which of the following is correct about the Limitations of accounting? Select one: O a. Accounting not looks at quality aspect b. there is no bias in accounting c. Price level changes consider in accounting O d. none of the options are correct
Typically, the impact of the LIFO reserve is to decrease cost of goods sold and decrease ending inventory increase cost of goods sold and increase ending inventory increase cost of goods sold and decrease ending inventory have no effect on cost of goods sold and ending inventory
Which of the following statements Is/are true? Multiple Cholce In a period of rising costs and stable inventory levels, using the FIFO method leads to a higher taxable income and higher net income compared to the LIFO method. All of the other answer choices are true. In a period of falling costs and stable inventory levels, cost of goods sold is the same under LIFO and FIFO. In a period of rising costs and stable inventory levels, using the LIFO method leads to a lower taxable income and higher net income compared to the FIFO method.
8.When applying the lower of cost or net realizable value (LCNRV) method, inventory value reported cannot exceed the: Multiple Choice market floor. selling price less the expected cost of completion and disposal. selling price less a normal profit margin. replacement cost Explain

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