Choose the statement which is correct. Assume that inventory prices are rising. Select one: a. The FIFO method gives the lowest closing inventory figure in the balance sheet. b. The FIFO method gives the highest closing inventory figure in the balance sheet. c. The LIFO method gives the lowest figure for cost of sales. d. The LIFO method gives the highest closing inventory figure in the balance sheet. e. None of the above answers is correct.

Q: Mark each of the following statements as either True or False and select the correct answer. _ In…

A: FIFO (First in First out )a)FIFO assumes the first items purchased are the first ones sold. It is…

Q: When there are no inventory at the beginning or at the end of the period, the total purchases will…

A: The total purchase amount is the price agreed upon by the buyer and seller for an item, including…

Q: complete the following table which compares the effects of LIFO,  FIFO and weighted-average…

A: Inventory valuation in costing is done using mainly three methods namely FIFO, LIFO and weighted…

Q: If ending inventory is understaffed for year 1, then in year 2…. A. Costa of goods sold and gross…

A: Inventory is the term used in accounting which refers to the goods as well as materials that the…

Q: The three most common inventory cost flow methods are a.FIFO, LIFO, and weighted average cost.…

A: The inventory valuation method is used by the management to evaluate the closing inventory and cost…

Q: Match the inventory method with its related characteristic. Assume a period of rising prices in all…

A: The objective of the question is to match the inventory valuation methods (LIFO, FIFO, Weighted…

Q: Which of the following statements is true for a company using the periodic inventory method? A.…

A: Inventory valuation is referred to as that method which helps in assigning a monetary value to the…

Q: (True or False) Cost of sales, under the periodic system, is calculated as inventory at start (plus…

A: Periodic Inventory System - Under periodic inventory system cost of goods sold will be calculated at…

Q: Compare the financial effects (ignore income tax) of using period of declining prices on the…

A: Depreciation is the process of reducing the value of the assets. It is a non-cash expense of the…

Q: The Quick Ratio is often use in conjuction with the current ratio because A It is easier to…

A: In finance we use different financial ratios to determine the financial health and position of a…

Q: In a period of rising prices, the inventory method which tends to give the highest reported…

A: During a period of rising prices FIFO Method is expected to give highest reported inventory as in…

Q: Prepare a memorandum containing responses to the following items. a.    Describe the cost flow…

A: a.

Q: If the inventory is valued at cost and the price level is steadily increasing, which type of…

A: Under FIFO, goods that are purchased initially are sold first, however, under LIFO it is assumed…

Q: Put the inventory valuation methods in order from which one yields the highest to which one yields…

A: Inventory Valuation is a method of calculating the value of stock at the end of an accounting…

Q: In a single period inventory model, it is optimal to order MORE than the expected demand if the cost…

A: A single inventory model, often referred to as a single item or single-product inventory model, is a…

Q: Which of the following inventory cost flow assumptions produces the same ending inventory values…

A: Periodic inventory system is a system where inventory records are updated on a periodic basis but in…

Q: Which of the following is true about the issues of the gross profit method of estimating inventory?…

A: The gross profit method is a method for estimating the value of ending inventory and cost of…

Q: Assuming that the price the company pays for inventory is increasing, which method will:

A: The appropriate answer is shown below

Q: 1. Inventory management aims at a. increase customer service levels b. All of the above c.…

A: Inventory management refers to the process of ordering, storing and using a company's inventory.

Q: The cost method that will yield an ending inventory value that is somewhere between possible high…

A: Inventory valuation has 4 Methods - 1. FIFO 2. LIFO 3. Weighted Average 4. Specific Identification…

Q: Which of the following inventory cost flow assumptions produces the same ending inventory values…

A: Periodic Inventory System : In periodic inventory system ending balance of inventory will be updated…

Q: The procedure selected to calculate the cost of the ending inventory has absolutely no effect on the…

A: Eliminating the incorrect option:The method chosen to calculate the cost of ending inventory does…

Q: Lower of cost or market is an attribute used for the:   a. initial measurement of accounts…

A: Lets understand the basicsas per IAS 2 "Inventory" inventory should initially be recorded at cost.…

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: During the period of increasing prices,

A: FIFO states that the inventory purchased first would be sold first. In the case of rising prices, in…

Q: 11. What is the effect on cost of goods sold, gross profit, and net income if ending mer- chandise…

A: Error in inventory recording can be cancelled or we can say nullified within two consecutive…

Q: Overstating ending inventory in the current year causes net income in the current year to be…

A: 1. True 2. False The weighted-average cost includes both beginning inventory and purchases and is…

Q: Compare the financial effects (ignore income tax) of using the FIFO and average inventory cost…

A: FIFO FIFO Means First in, First Out. It is one of the Important Method of Valuation of Inventory.…

Q: Suppose Ajax Corporation overstates its ending inventory amount. What effect will this have on the…

A: Given information is: Ajax Corporation overstates its ending inventory amount.

Q: If beginning inventory is understated, then: a. goods available for sale will be overstated. b.…

A: The cost of goods sold represents the direct costs of producing goods or purchasing them for resale…

Q: A list of errors is shown below: Show the effects of the errors on the indicated balance sheet and…

A: solution The answer is presented in the table below

Q: Which inventory method will result in lower net income in a period of rising prices? Which inventory…

A: First-in-First-Out (FIFO): In this method, items purchased initially are sold first. So, the value…

Q: Explain how the inventory valuation method (LIFO or FIFO) chosen by a company affects the cost of…

A: Inventory management refers to the valuation of inventory in three ways FIFO, LIFO and weighted…

Q: The answer is d, ex In a period of rising prices, the inventory method which tends to report the…

A: Inventory can be valued using various methods -First-in First-Out Method - Under the First-in…

Q: When there are no inventory at the beginning or at the end of the period, the total purchases will…

A: Cost of sales means actual cost of goods that is being sold to the customers. It includes beginning…

Q: 3. What is the purpose of the current ratio? Assume that Island Solutions want to compute its…

A: The current ratio is a financial metric that measures a company's ability to cover its short-term…

Q: Are you correct that, by using LIFO, Kroger reports lower inventory and lowerprofits? Why would…

A: Perpetual and periodic inventory system: In merchandise business, there are two types of inventory…

Q: Explain briefly the application of the LCM rule to ending inventory. Describe its effect on the…

A:

Q: 1.At a time of declining prices, which cost flow assumption will result in inventory? A. FIFO B.…

A: "Since you have asked multiple questions, we will solve first question for you. If you want any…

Q: Which of the following is false? Select one: a. Days’ sales in inventory is equal to the average…

A: Option “B” is False.

Q: For the same transactions, why does the weighted-average cost method provide different value for…

A: The key difference between the two systems is the timing of cost calculations. In a perpetual…

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.