Indicate the effects of the transactions listed, on current assets, current ratios and net income. Use (increase) to indicate an increase, (decrease) to indicate a decrease and (no effect) to indicate no effect or an indeterminate effect. A fully depreciated asset is retired. Net income will experience Choose.. Merchandise is sold for cash. Total current assets will, Choose. An increase in inventory turnover ratio signifies Choose. in a firm's efficiency. A fixed asset is sold for more than book value. Net income will Choose.

Indicate the effects of the transactions listed, on current assets, current ratios and net income. Use (increase) to indicate an increase, (decrease) to indicate a decrease and (no effect) to indicate no effect or an indeterminate effect. A fully depreciated asset is retired. Net income will experience Choose.. Merchandise is sold for cash. Total current assets will, Choose. An increase in inventory turnover ratio signifies Choose. in a firm's efficiency. A fixed asset is sold for more than book value. Net income will Choose.

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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Which inventory valuation approach comes closest to having COGS represent the costs the firm most recently paid to acquire inventory? O Average cost O FIFO O Not enough information to answer O LIFO
Historical cost is based on actual, not merely possible, transactions. It is the acquisition price of the assets. The managers only have to record all the assets and liabilities at their acquisition price. This results in; a. Less manipulations in financial statements b. surviving test of time c. making relevant economic decisions d. None
The management of Milque Corp. is considering the effects of inventory-costing methods on its financial statements and its income tax expense. Assuming that the cost the company pays for inventory is increasing, which method will: (a) (b) (c) Provide the highest net income? Provide the highest ending inventory? Result in the lowest income tax expense? 10
Which of these is not a liquidity ratio? Choose Current ratio Asset turnover ratio Inventory turnover ratio Receivables turnover ratio Which of the following usually is least important as a measure of short-term
Which method results in a balance sheet valuation of inventory method farthest away from its economic value? Select one: a. FIFO b. LIFO c. Weighted Average PreviousSave AnswersNext
The accounting records of Wall's China Shop reflected the following balances as of January 1, Year 2: Cash Beginning inventory Common stock Retained earnings The following five transactions occurred in Year 2: 1. First purchase (cash) 120 units @ $90 2. Second purchase (cash) 205 units @ $98 3. Sales (all cash) 350 units @ $197 4. Paid $13,950 cash for salaries expense 5. Paid cash for income tax at the rate of 25 percent of income before taxes $16, 800 17,600 (200 units @ $88) 15, 700 18,700 Required a. Compute the cost of goods sold and ending inventory, assuming (1) FIFO cost flow, (2) LIFO cost flow, and (3) weighted-average cost flow. b. Use a vertical model to show the Year 2 income statement, balance sheet, and statement of cash flows under FIFO, LIFO, and weighted average. (Hint: Record the events under an accounting equation before preparing the statements.) Complete this question by entering your answers in the tabs below. Req A Req B1 Cost of goods sold Ending inventory Req…
When inventory is adjusted down, what is the impact on the balance sheet? a. The value of the asset, Merchandise Inventory, is restated at a more conservative number. b. The value of the asset, Merchandise inventory, is increased to reflect a more optimistic outlook. c. The value of the liability, Selling Expense, would be decreased to reflect a more conservative outlook. d. The value of the liability, Operating Expenses, would be increased to reflect the loss. You are an accountant for ACME Corporation working on inventory valuation. What would prevent you from using LCNRV to adjust the value of your inventory? a. If ACME uses NIFO. b. If ACME uses LIFO to cost inventory. c. If ACME uses FIFO to cost inventory. d. If the Cost of Goods Sold exceeds last quarter’s COGS.
Peanut Company acquired 100 percent of Snoopy Company's outstanding common stock for $300,000 on January 1, 20X8, when the book value of Snoopy's net assets was equal to $300,000. Accumulated depreciation on this date was $10,000. Peanut uses the equity method t ed to account for investments. The following trial balance summarizes the financial position and operations for Peanut and Snoopy as of December 31, 20X9: Cash Accounts Receivable Inventory Investment in Snoopy Company Land Buildings and Equipment Cost of Goods Sold Depreciation Expense Selling and Administrative Expense Dividends Declared Accumulated Depreciation. Accounts Payable Bonda Payable Common Stock Retained Earnings Sales Income from Snoopy Company Total Required A Required B View transaction list Journal entry worksheet < A Note: Enter debits before credits. Event 1 Record entry Required A Required B < No journal entry required. (Assume the company prepares the optional Accumulated Depreciation Elimination Entry.)…
Compute the cost of goods sold and ending inventory, assuming (1) FIFO cost flow, (2) LIFO cost flow, and (3) weighted-average cost flow. Then, compute the income tax expense for each method. Use a vertical model to show the 2018 income statement, balance sheet, and statement of cash flows under FIFO, LIFO, and weighted average. (Hint: Record the events under an accounting equation before preparing the statements.)
preparing an indirect method statement of cash flows, an increase in ending inventory over beginning inventory will result in an adjustment to reported net earnings because O a. cash was increased while cost of goods sold was decrease O b. cost of goods sold on an accrual basis is lower than on a cash basis. O c. inventory purchased during the period was less than inventory sold resulting in a net cash increase. d. O d. acquisition of inventory is an investment activity.
What does the inventory turnover period ratio measure? Select one: a.Profitability. b.The average time an organisation holds inventory. c.The liquidity of the firm. d.How much the firm's current assets could decrease and still leave it able to pay its current liabilities.
Total asset turnover indicates the company's: A. Profitability.B. Ability to use its assets to generate sales.C. Liquidity.D. Debt position