Account Question How should a company account for a change in inventory valuation method fromFIFO to Weighted Average?a) Apply the change prospectively to new purchasesb) Record as a change in estimate in current periodc) Retrospectively restate prior periodsd) Disclose in notes only without adjustment

Explanation of FIFO (First-In, First-Out):FIFO stands for First-In, First-Out, which is a method of…

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Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter10: Inventory

Section: Chapter Questions

Problem 12MC: Which of the following financial statements would be impacted by a current-year ending inventory...

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What is the basic assumption underlying the gross profit method? How may the gross profit percentage for the prior year be modified to provide a better estimate of the inventory value?
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How long does it take an inventory error affecting ending inventory to correct itself in the financial statements? Explain.
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Which of the following is accounted for prospectively? Change in reporting entity. Change in the percentage used to determine warranty expense. Correction of an error. Changes from the weighted-average method of inventory costing to FIFO.
For each change or error below, indicate how it would be accounted for. 1. Change due to understatement of inventory. options: A.) accounted for prospectively b.) prior period adjustment 2. change from direct write-off to allowance method of accounting for bad debts. Options: a.) accounted for retrospectively b.) prior period adjustment
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Discuss how a change to the LIFO method of inventory valuation is handled when it is impracticable to determine previous LIFO inventory amounts
Assuming the Periodic Inventory Method is used, which of the following accounts would be transferred to the Trading account? Select one: a. Depreciation b. Interest Received c. Customs Duty d. Cost of Goods Sold
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How should a company account for a change in inventory valuation method from FIFO to Weighted Average? a) Apply the change prospectively to new purchases b) Record as a change in estimate in current period c) Retrospectively restate prior periods d) Disclose in notes only without adjustment