Consolidated Income Statements In millions of dollars Year ended Dec 31, 2020 Year ended Dec 31, 2019 Year ended Dec 31, 2018 Net sales $ 9,385 $ 9,715 $ 10,154 Cost of goods sold 6,306 6,496 6,636 Selling, general, and administrative expenses 3,713 3,701 11,072 Consolidated Balance Sheets In millions of dollars ASSETS As of Dec 31, 2020 As of Dec 31, 2019 Cash and cash equivalents $ 981 $ 349 Accounts receivable, net 1,678 1,842 Inventories 1,638 1,606 Prepaid expenses and other current assets 331 313 Total current assets $ 4,628 $ 4,110 Which inventory cost flow assumption does Newell Brands use to value its inventories? LIFO FIFO Weighted Average Cost Specific Identification What is the most likely reason that Newell Brands chose this inventory cost flow assumption (given rising price trend)? To report higher Net Income on its Income Statement. To report higher Total Assets on its Balance Sheet. To pay less taxes. Both a and b are true. Which of the following statements about Newell Brands is TRUE? Fiscal year 2020 Gross Profit > Fiscal year 2019 Gross Profit. Fiscal year 2020 COGS < Fiscal year 2019 COGS. Fiscal year 2019 Gross Profit < Fiscal year 2018 Gross Profit. Fiscal year 2020 Operating Income < Fiscal year 2019 Operating Income. 5.Both b and c are true

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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Consolidated Income Statements In millions of dollars
	Year ended Dec 31, 2020	Year ended Dec 31, 2019	Year ended Dec 31, 2018
Net sales	$ 9,385	$ 9,715	$ 10,154
Cost of goods sold	6,306	6,496	6,636
Selling, general, and administrative expenses	3,713	3,701	11,072

Consolidated Balance Sheets In millions of dollars
ASSETS	As of Dec 31, 2020	As of Dec 31, 2019
Cash and cash equivalents	$ 981	$ 349
Accounts receivable, net	1,678	1,842
Inventories	1,638	1,606
Prepaid expenses and other current assets	331	313
Total current assets	$ 4,628	$ 4,110

Which inventory cost flow assumption does Newell Brands use to value its inventories?
1. LIFO
2. FIFO
3. Weighted Average Cost
4. Specific Identification

What is the most likely reason that Newell Brands chose this inventory cost flow assumption (given rising price trend)?
1. To report higher Net Income on its Income Statement.
2. To report higher Total Assets on its Balance Sheet.
3. To pay less taxes.
4. Both a and b are true.

Which of the following statements about Newell Brands is TRUE?
1. Fiscal year 2020 Gross Profit > Fiscal year 2019 Gross Profit.
2. Fiscal year 2020 COGS < Fiscal year 2019 COGS.
3. Fiscal year 2019 Gross Profit < Fiscal year 2018 Gross Profit.
4. Fiscal year 2020 Operating Income < Fiscal year 2019 Operating Income.

5.Both b and c are true

Expert Solution

Step 1 : Introduction

FIFO method is an important accounting method which stands for "First In First Out" and as the name suggests it is basically that the assets purchased first will be released first.So the conclusion is that the remaining assets are basically those assets purchased at last.

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