Which of the following is not a disadvantage of using the FIFO cost flow assumption? includes all the holding gains in income during periods of rising prices does not match current costs against current revenues provides a relevant ending inventory value creates the highest outflow for income taxes during periods of rising prices

Which of the following is not a disadvantage of using the FIFO cost flow assumption? includes all the holding gains in income during periods of rising prices does not match current costs against current revenues provides a relevant ending inventory value creates the highest outflow for income taxes during periods of rising prices

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 one of the following is an advantage of LIFO? a. In periods of rising prices, less income taxes are paid b. In periods of rising prices, more holding gains are reported in net income c. Record keeping and financial statement preparation are easier d. Conservative income statement and balance sheet disclousures result from falling prices
Which U.S. GAAP principle or rule would apply if the net realizable value of acompany’s inventory is below its original cost?a. Lower-of-cost-or-market ruleb. Consistency principlec. Disclosure principled. Historical cost principle
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.
Vaibh
Typically, the impact of the LIFO reserve is to decrease cost of goods sold and decrease ending inventory increase cost of goods sold and increase ending inventory increase cost of goods sold and decrease ending inventory have no effect on cost of goods sold and ending inventory
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.
What is the main criticism of LIFO? A. It presents a balance sheet figure that is out-of-date. B. It artificially creates a higher income. C. It utilizes a unit cost that has no evidence of existence. D. It is often complicated to implement, especially if inventory costs change frequently.
8.When applying the lower of cost or net realizable value (LCNRV) method, inventory value reported cannot exceed the: Multiple Choice market floor. selling price less the expected cost of completion and disposal. selling price less a normal profit margin. replacement cost Explain
Which one of the following statements is true? a. Income manipulation is difficult under LIFO.b. Accounting principles do not require that the inventory cost flow approximate the physical flow of goods.c. Companies may use LIFO for tax purposes and FIFO in the financial statements.d. In periods of declining prices, LIFO will result in the payment of less income taxes.
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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.