Prof Gear uses FIFO method to cost inventories, and Watsco uses the LIFO method. During periods of rising prices which of the following is true: A) Prof Gear's Inventory is closer to replacement costs and it's COGS is lower than current costs compared to Watsco. B) During periods of rising prices a firm that uses LIFO will have a more accurate (i.e. closer to replacement costs) for the Inventory on their balance sheet. C) During periods of rising prices a firm that uses FIFO will have a more accurate (closer to current costs) for their COGS on their income statement. D) Prof Gear's Inventory is much lower than replacement costs and it's COGS is closer to current costs compared to Watsco.

Prof Gear uses FIFO method to cost inventories, and Watsco uses the LIFO method. During periods of rising prices which of the following is true: A) Prof Gear's Inventory is closer to replacement costs and it's COGS is lower than current costs compared to Watsco. B) During periods of rising prices a firm that uses LIFO will have a more accurate (i.e. closer to replacement costs) for the Inventory on their balance sheet. C) During periods of rising prices a firm that uses FIFO will have a more accurate (closer to current costs) for their COGS on their income statement. D) Prof Gear's Inventory is much lower than replacement costs and it's COGS is closer to current costs compared to Watsco.

College Accounting, Chapters 1-27

23rd Edition

ISBN:9781337794756

Author:HEINTZ, James A.

Publisher:HEINTZ, James A.

Chapter13: Accounting For Merchandise Inventory

Section: Chapter Questions

Problem 4MC: In rimes of rising prices, the inventory cost method that will yield the highest cost of goods sold...

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In rimes of rising prices, the inventory cost method that will yield the highest cost of goods sold is (a) LIFO. (b) weighted-average. (c) FIFO. (d) none of the above.
Which of the following statement is not valid as it applies to inventory costing method? A) If inventory quanities are to be maintained, part of the earning must be invested (plowed back) in inventories when FIFO is used during a period of rising prices. B) LIFO tends to smooth ou the net income patterns by matching currents cost of goods sold with current revenue, when inventories remain at costant quantities. C) When a firm using the LIFO method fails to maintain its usual inventory position (reduces stock on hand below customary levels), there may be a matching of old cost with current revenue. D) The use of FIFO permits some control by managment over the amount of net income for a period through controlled purchase, which is not true with LIFO.
Which of the following statements regarding the lower of cost and net realizable value (LCNRV) rule is true? a.The LCNRV rule is an application of the cost principle. b.When the net realizable value of inventory drops below the cost of inventory, an adjustment is made to decrease inventory to its net realizable value and decrease income. c.If a company uses the LCNRV rule, there is no need to use a cost flow assumption such as FIFO, or weighted average cost. d.When the net realizable value of inventory is above the cost of inventory, an adjustment is made to increase inventory to its net realizable value and increase income.
If costs are rising, which of the following will be true?a. The cost of goods sold will be greater if LIFO is usedrather than weighted average.b. The cost of ending inventory will be greater if FIFO isused rather than LIFO.c. The gross profit will be greater if FIFO is used ratherthan LIFO.d. All of the above are true
Which of the following is true regarding LIFO and FIFO? A) In a period of decreasing costs, LIFO results in lower total assets than FIFO. B) In a period of decreasing costs, LIFO results in lower net income than FIFO. C) In a period of rising costs, LIFO results in lower net income than FIFO. D) The amount reported for COGS is based on net realizable value of inventory if LIFO is used. E) None of the Above
In a period of rising prices,a. cost of goods sold under LIFO will be less than under FIFO.b. gross profit under FIFO will be higher than under LIFO.c. LIFO inventory will be greater than FIFO inventory.d. net income under LIFO will be higher than under FIFO.
In a single period inventory model, it is optimal to order MORE than the expected demand if the cost of having a shortage is greater than the cost of having a surplus. True False
When inventory unit costs are increasing: Group of answer choices a)FIFO will result in higher ending inventory than will LIFO b)LIFO will result in higher ending inventory than will FIFO c)FIFO will result in higher cost of goods sold than will LIFO d)FIFO will result in higher net income and lower ending inventory than LIFO
If prices are rising, which inventory cost flow method will produce the lowest amount of cost of goods sold? Multiple Choice Weighted average. LIFO, FIFO, and the weighted-average inventory cost flow methods will all produce equal amounts of cost of goods sold. FIFO. LIFO.
In times of decreasing prices, LIFO will result in ____ costs of goods sold and _____ ending inventory than FIFO. Group of answer choices: Lower, Lower Lower, Higher Higher, Lower Higher, Higher
When purchase prices are rising, which of the following statements is true? a.LIFO produces a higher cost of goods sold than FIFO. b.LIFO produces a higher cost for ending inventory than FIFO. c.FIFO produces a lower amount for net income than LIFO. d.Weighted average cost produces a higher net income than FIFO or LIFO.
Ih order to attract investors and borrow on attractive terms, a company would use in times when inventory costs are rising. A) average costing B) specific-identification costing C) FIFO O D) LIFO