6th Edition

ISBN: 9781260725254

Author: PHILLIPS

Publisher: MCG

See similar textbooks

Videos

Textbook Question

Chapter 13, Problem 14ME

Describing the Effect of Accounting Decisions on Ratios

For each of the following three accounting choices, indicate the decision that will yield (a) a higher net profit margin and (b) a lower current ratio. If the decision does not affect the ratio, indicate “no effect.”

1. Straight-line versus accelerated depreciation (in the first year of the asset’s life).
2. FIFO versus LIFO (in periods of constantly rising costs and rising inventory levels).
3. Straight-line depreciation with a four-year useful life versus a seven-year useful life (no residual value).

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Chapter 13, Problem 13ME

Chapter 13, Problem 1E

Students have asked these similar questions

The adjusting entry for depreciation includes:A. Debit Asset, Credit Depreciation ExpenseB. Debit Depreciation Expense, Credit Accumulated DepreciationC. Debit Accumulated Depreciation, Credit AssetD. Debit Cash, Credit Asset

Tutor, can you please help me solve this general accounting problem

Which document supports a purchase on account?A. Sales invoiceB. Purchase orderC. Bank deposit slipD. Credit memo Correct solution

Chapter 13 Solutions

FUND. OF FINANCIAL ACCT. (LL) W/CONNECT

Ch. 13 - What is the general goal of trend analysis?Ch. 13 - Prob. 2Q Ch. 13 - What is ratio analysis? Why is it useful?Ch. 13 - What benchmarks are commonly used for interpreting...Ch. 13 - Prob. 5Q Ch. 13 - Prob. 6Q Ch. 13 - Slow Cellars current ratio increased from 1.2 to...Ch. 13 - From last year to this year, Colossal Companys...Ch. 13 - From last year to this year, Berry Bam reported...Ch. 13 - Explain whether the following situations, taken...

Ch. 13 - What are the two essential characteristics of...Ch. 13 - Prob. 12Q Ch. 13 - Prob. 13Q Ch. 13 - Prob. 14Q Ch. 13 - Prob. 15Q Ch. 13 - Prob. 16Q Ch. 13 - 1. Which of the following ratios is not used to...Ch. 13 - Prob. 2MC Ch. 13 - Prob. 3MC Ch. 13 - Analysts use ratios to a. Compare different...Ch. 13 - Which of the following ratios incorporates stock...Ch. 13 - Prob. 6MC Ch. 13 - Prob. 7MC Ch. 13 - A bank is least likely to use which of the...Ch. 13 - Prob. 9MC Ch. 13 - (Supplement 13A) Which of the following items is...Ch. 13 - Calculations for Horizontal Analyses Using the...Ch. 13 - Calculations for Vertical Analyses Refer to M13-1....Ch. 13 - Interpreting Horizontal Analyses Refer to the...Ch. 13 - Interpreting Vertical Analyses Refer to the...Ch. 13 - Prob. 5ME Ch. 13 - Prob. 6ME Ch. 13 - Prob. 7ME Ch. 13 - Analyzing the Inventory Turnover Ratio A...Ch. 13 - Inferring Financial Information Using the Current...Ch. 13 - Prob. 10ME Ch. 13 - Identifying Relevant Ratios Identify the ratio...Ch. 13 - Prob. 12ME Ch. 13 - Analyzing the Impact of Accounting Alternatives...Ch. 13 - Describing the Effect of Accounting Decisions on...Ch. 13 - Prob. 1E Ch. 13 - Prob. 2E Ch. 13 - Prob. 3E Ch. 13 - Prob. 4E Ch. 13 - Prob. 5E Ch. 13 - Matching Each Ratio with Its Computational Formula...Ch. 13 - Computing and Interpreting Selected Liquidity...Ch. 13 - Prob. 8E Ch. 13 - Prob. 9E Ch. 13 - Prob. 10E Ch. 13 - Prob. 11E Ch. 13 - Prob. 12E Ch. 13 - Prob. 13E Ch. 13 - Prob. 14E Ch. 13 - Analyzing the Impact of Alternative Inventory...Ch. 13 - Prob. 1CP Ch. 13 - Prob. 2CP Ch. 13 - Prob. 3CP Ch. 13 - Prob. 4CP Ch. 13 - Prob. 5CP Ch. 13 - Prob. 6CP Ch. 13 - Prob. 7CP Ch. 13 - Prob. 1PA Ch. 13 - Prob. 2PA Ch. 13 - Prob. 3PA Ch. 13 - Prob. 4PA Ch. 13 - Prob. 5PA Ch. 13 - Using Ratios to Compare Loan Requests from Two...Ch. 13 - Prob. 7PA Ch. 13 - Prob. 1PB Ch. 13 - Prob. 2PB Ch. 13 - Prob. 3PB Ch. 13 - Prob. 4PB Ch. 13 - Prob. 5PB Ch. 13 - Using Ratios to Compare Loan Requests from Two...Ch. 13 - Prob. 7PB Ch. 13 - Prob. 1SDC Ch. 13 - Prob. 2SDC Ch. 13 - Prob. 5SDC Ch. 13 - Prob. 6SDC Ch. 13 - Prob. 7SDC Ch. 13 - Prob. 1CC

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Solution Summary: The author explains that straight-line depreciation yields a higher net profit margin and lower current ratio. FIFO reduces the cost of goods sold during the period of constant rise in costs and inventory level.

Videos

Want to see the full answer?

Chapter 13 Solutions