Q2. Which of the following inventory valuation methods typically results in the highest reportedinventory value during periods of rising prices, potentially leading to higher taxable income? A)First-In, First - Out (FIFO) B) Last-In, First - Out (LIFO) C) Weighted Average Cost D) SpecificIdentification

B) Last - In, First - Out (LIFO)Explanation:LIFO (Last-in, First-out) is typically used during…

Answered: Q2. Which of the following inventory…

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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The application of the lower of cost or market rule to inventory valuation is an example of a. the revenue realization principle b. the going concern assumption c. special industry practices d. conservatism
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The original cost of an item of inventory is above its replacement cost. The item s replacement cost is below its net realizable value but is higher than its net realizable value minus a normal profit. Under the lower of cost or market method, the inventory item should be valued at: a. Net realizable value. b. Original cost. c. Replacement cost. d. Net realizable value less normal profit margin.
Which of the following statements Is/are true? Multiple Cholce In a period of rising costs and stable inventory levels, using the FIFO method leads to a higher taxable income and higher net income compared to the LIFO method. All of the other answer choices are true. In a period of falling costs and stable inventory levels, cost of goods sold is the same under LIFO and FIFO. In a period of rising costs and stable inventory levels, using the LIFO method leads to a lower taxable income and higher net income compared to the FIFO method.
Which of the following regarding the lower of cost ormarket rule for inventory are true?(i) The lower of cost or market rule is an example of thehistorical cost principle.(ii) When the market value of inventory drops belowthe original cost of inventory shown in the financialrecords, net income is reduced.(iii) When the market value of inventory drops belowthe original cost of inventory shown in the financialrecords, total assets are reduced.a. (i) only c. (ii) and (iii)b. (ii) only d. All of the above
Question: Which of the following inventory valuation methods typically results in higher ending inventory value during periods of rising prices? A) FIFO (First-In-First-Out) method B) LIFO (Last-In-First-Out) method C) Weighted Average method D) Specific Identification method
Which of the following statements about the use of the FIFO assumption is NOT true? a.The FIFO assumption assigns the more recent purchase costs to the balance sheet inventory asset account. b.The FIFO assumption is not affected by the inventory control method. c.In periods of rising prices it produces a higher profit than LIFO. d.The FIFO assumption produces inventory asset values that are based on older purchase costs.

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