College Accounting, Chapters 1-27 (New in Accounting from Heintz and Parry)
22nd Edition
ISBN: 9781305666160
Author: James A. Heintz, Robert W. Parry
Publisher: Cengage Learning
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Textbook Question
Chapter 13, Problem 4MC
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.
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Which inventory cost flow assumption generally results in the lowest reported amount for cost of goods sold when inventory costs are rising? a. Lower of cost and net realizable value. b. First-in, first-out (FIFO). c. Last-in, first-out (LIFO). d. Weighted-average cost.
Under the lower of cost or market inventory valuation rule, market value of inventory is defined as:
a.Net realizable value.
b.Net realizable value minus a normal profit margin.
c.The lower of net realizable value or current replacement cost.
d.Current replacement cost.
Which of the following statements is NOT true of Economic Order Quantity?
O A. The economic order quantity mathematically determines the minimum total inventory cost
B. The EOQ is directly proportional to the sales per period
O C. The optimal order size is determined by the EOQ model
D. The EOQ ignores inventory reorder costs and inventory carrying costs
Chapter 13 Solutions
College Accounting, Chapters 1-27 (New in Accounting from Heintz and Parry)
Ch. 13 - An overstatement of ending inventory in the year...Ch. 13 - An understatement of ending inventory in the year...Ch. 13 - LO2 Under the perpetual system of accounting for...Ch. 13 - LO3 A fiscal year that starts and ends at the time...Ch. 13 - LO3 If goods are shipped FOB shipping point, the...Ch. 13 - An understatement of ending inventory in the year...Ch. 13 - Prob. 2MCCh. 13 - In rimes of rising prices, the inventory cost...Ch. 13 - In rimes of rising prices, the inventory cost...Ch. 13 - In the application of lower-of-cost-or-market,...
Ch. 13 - LO1 If the ending inventory is overstated by...Ch. 13 - Using the following information, compute the...Ch. 13 - Use the following information to compute cost of...Ch. 13 - Kulsrud Company would like to estimate the current...Ch. 13 - What financial statements are affected by an error...Ch. 13 - What is the main difference between the periodic...Ch. 13 - Is a physical inventory necessary under the...Ch. 13 - Is a physical inventory necessary under the...Ch. 13 - In a period of rising prices, which inventory...Ch. 13 - What two factors are taken into account by the...Ch. 13 - Which inventory method always follows the actual...Ch. 13 - When lower-of-cost-or-market is assigned to the...Ch. 13 - List the three steps followed under the gross...Ch. 13 - List the five steps followed under the retail...Ch. 13 - INVENTORY ERRORS Assume that in year 1, the ending...Ch. 13 - JOURNAL ENTRIESPERIODIC INVENTORY Paul Nasipak...Ch. 13 - JOURNAL ENTRIESPERPETUAL INVENTORY Joan Ziemba...Ch. 13 - ENDING INVENTORY COSTS Sandy Chen owns a small...Ch. 13 - LOWER-OF-COST-OR-MARKET Stalberg Companys...Ch. 13 - SPECIFIC IDENTIFICATION, FIFO, LIFO, AND...Ch. 13 - COST ALLOCATION AND LOWER-OF-COST-OR-MARKET...Ch. 13 - Prob. 8SPACh. 13 - RETAIL INVENTORY METHOD The following information...Ch. 13 - INVENTORY ERRORS Assume that in year 1, the ending...Ch. 13 - JOURNAL ENTRIESPERIODIC INVENTORY Amy Douglas owns...Ch. 13 - JOURNAL ENTRIESPERPETUAL INVENTORY Doreen Woods...Ch. 13 - ENDING INVENTORY COSTS Danny Steele owns a small...Ch. 13 - LOWER-OF-COST-OR-MARKET Bouie Companys beginning...Ch. 13 - SPECIFIC IDENTIFICATION, FIFO, LIFO, AND...Ch. 13 - COST ALLOCATION AND LOWER-OF-COST-OR-MARKET Hall...Ch. 13 - GROSS PROFIT METHOD A flood completely destroyed...Ch. 13 - RETAIL INVENTORY METHOD The following information...Ch. 13 - Hurst Companys beginning inventory and purchases...Ch. 13 - Bhushan Company has been using LIFO for inventory...
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- When would using the FIFO inventory costing method produce higher inventory account balances than the LIFO method would? A. inflationary times B. deflationary times C. always D. neverarrow_forwardWhich one of the following statements is true? a. Under conditions of rising prices, the LIFO method results in lower income than the FIFO method. b. In most cases, the LIFO method approximates the physical flow of items in inventory. c. The LIFO mthod produces a higher ending inventory value than the FIFO method. d. The FIFO method excludes holding gains from incomearrow_forwardIf 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.arrow_forward
- Under the LIFO cost flow assumption during a period ofinflation, which of the following is false? A. Cost of goods sold will be lower than under FIFO B. Gross margin will be lower than under FIFO C. Income tax expense will be lower than under FIFO D. Ending inventory will be lower than under FIFOarrow_forwardIdentify that if prices are rising, which inventory cost flow method will produce the highest amount of ending inventory? A. Weighted average B. LIFO C. FIFO S. LIFO, FIFO, and weighted average will all produce the same amount of cost of goods sold.arrow_forwardThe answer is d, ex In a period of rising prices, the inventory method which tends to report the lowest inventory is a. FIFO. b. LISH. c. Specific identification. d. Average - cost.arrow_forward
- During a period of falling prices, which of the following inventory methods generally results in the lowest balance sheet amount for inventory? Da. FIFO method b. LIFO method c. average cost method d. Cannot tell without more information.arrow_forwardIf merchandise inventory is being valued at cost and the purchase price is steadily falling, which method of costing will yield the largest net income? Select one: a. average cost. b. LIFO. c. FIFO. d. weighted average. e. All methods will result in the same figure of net income.arrow_forwardIn determining inventory's lower of cost or net realizable value, NRV is defined as: O Selling Cost O replacement cost Osales price less selling costs Sales Pricearrow_forward
- If inventory is being valued at cost and the price level is steadily rising, which of the three methods of costing—FIFO, UFO, or weighted average cost—will yield the lowest an nual income tax expense? Explain.arrow_forwardDuring a period of rising inventory prices the LIFO cost flow method will result in higher total assets than FIFO. True or False True Falsearrow_forwardFor each of the following situations, indicate whether FIFO, LIFO, or weighted average applies: a. In a period of falling prices, net income would be highest. b. In a period of falling prices, the unit cost of goods would be the same for ending inventory and cost of goods sold. c. In a period of rising prices, net income would be highest. d. In a period of rising prices, cost of goods sold would be highest. e. In a period of rising prices, ending inventory would be highest.arrow_forward
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