8.6 Presentation and Decision Analysis Why must companies report inventory composition? O so that changes in costing methods between types of inventory may be clearly seen to prevent changes to net income when costing methods are changed O to better illustrate the value of the inventory as collateral O to better illustrate the liquidity of the inventory

8.6 Presentation and Decision Analysis Why must companies report inventory composition? O so that changes in costing methods between types of inventory may be clearly seen to prevent changes to net income when costing methods are changed O to better illustrate the value of the inventory as collateral O to better illustrate the liquidity of the inventory

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Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter6: Cost Of Goods Sold And Inventory

Section: Chapter Questions

Problem 36BE: Effects of Inventory Costing Methods Refer to the information for Tyler Company above. Required: 1....

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When inventory items are highly specialized, the best inventory costing method is ________. A. specific identification B. first-in, first-out C. last-in, first-out D. weighted average
Explain why, in the traditional view of inventory, carrying costs increase as ordering costs decrease.
Which inventory costing method is almost always done on a perpetual basis? A. specific identification B. first-in, first-out C. last-in, first-out D. weighted average
Inventory Write-Down The following information is taken from Aden Companys records: Required: 1. What is the correct inventory value if the company applies the LCNRV rule to each of the following? a. individual items b. groups of items c. the inventory as a whole 2. Next Level Are there any conditions under which a company may ignore the decline in the value of inventory below its cost?
Effects of Inventory Costing Methods Refer to the information for Tyler Company above. Required: 1. Which inventory costing method produces the highest amount for net income? 2. Which inventory costing method produces the lowest amount for taxes? 3. Which inventory costing method produces the highest amount for ending inventory? 4. How would your answers to Requirements 1-3 change if inventory prices declined during the period?
In a period of rising costs, which inventory valuation method would a company likely choose if they want to have the highest possible amount of inventory reported in the balance sheet? Multiple Choice Weighted-average cost Straight-line FIFO LIFO
Which cost flow assumption generally results in the highest reported amount for ending inventory when inventory costs are rising? Explain.
Which of the following is an assumption of cost-volume-profit analysis? a. The inventory quantities during the period can change. b. Within the relevant range of operating activity, the efficiency of operations can change. c. Costs can be divided into fixed and variable components. d. The sales mix can vary. 5 Which of the following is an assumption of cost-volume-profit analysis? a. The inventory quantities during the period can change. b. Within the relevant range of operating activity, the efficiency of operations can change. c. Costs can be divided into fixed and variable components. d. The sales mix can vary.
QUESTION 9 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 O B. The EOQ is directly proportional to the sales per period OC. The optìmal order size is determined by the EOQ model O D. The EOQ ignores inventory reorder costs and inventory carrying costs
QUESTION 25 Which of the following is not an inventory method/cost flow assumption? O a. First-in, first-out O b. Average cost O c. Last-in, first-out O d. Lower-of-cost-or-market
Define Inventory Turnover? Explain what the results mean and provide an example.
QUESTION 4 Which of the following is used to analyze the efficiency and effectiveness of inventory management? a. inventory turnover only b. number of days' sales in inventory only c. both inventory turnover and number of days' sales in inventory d. neither inventory turnover or number of days' sales in inventory