EBK FINANCIAL ACCOUNTING THEORY AND ANA
12th Edition
ISBN: 9781119299646
Author: CATHEY
Publisher: JOHN WILEY+SONS,INC.-CONSIGNMENT
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Chapter 3, Problem 3.6C
a)
To determine
To discuss : Effect of ‘Last In First Out Method’ and ‘First In Last Out Method’ of
b)
To determine
To discuss : Concept of conservatism with reference to policy of General Motors and Ford along with policy of Honda and Daimler-Benz.
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Students have asked these similar questions
When an entity prepares financial statements in a current cost basis, how is the cost of goods sold computed?
a. Number of units sold times average current cost
b. Number of units sold times current cost at year-end
c. Number of units sold times beginning current cost
d. Beginning inventory at current cost plus cost of goods purchased less ending inventory at current cost
(Multiple Choice) A multi-step income statement ________.
A. separates cost of goods sold from operating expenses
B. considers interest revenue an operating activity
C. is another name for a simple income statement
D. combines cost of goods sold and operating expenses
Which of the following statements are true regarding Costof Goods Sold?(i) Cost of Goods Sold represents the costs that a company incurred to purchase or produce inventory in thecurrent period.(ii) Cost of Goods Sold is an expense on the incomestatement.(iii) Cost of Goods Sold is affected by the inventorymethod selected by a company (FIFO, LIFO, etc.).a. (i) only c. (ii) and (iii)b. (ii) only d. All of the above.
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EBK FINANCIAL ACCOUNTING THEORY AND ANA
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- View Policies Current Attempt in Progress You have the following information for Oriole Diamonds. Oriole Diamonds uses the periodic method of accounting for its inventory transactions. Oriole only carries one brand and size of diamonds-all are identical. Each batch of diamonds purchased is carefully coded and marked with its purchase cost. March 1 Beginning inventory 177 diamonds at a cost of €362 per diamond. March 3 Purchased 236 diamonds at a cost of €413 each. March 5 Sold 220 diamonds for €708 each. March 10 Purchased 413 diamonds at a cost of €456 each. March 25 Sold 472 diamonds for €767 each. (a) Assume that Oriole Diamonds uses the specific identification cost flow method. (1) Demonstrate how Oriole Diamonds could maximize its gross profit for the month by specifically selecting which diamonds to s To maximize gross profit, Oriole Diamonds should sell the diamonds with the Demonstrate how Oriole Diamonds could minimize its gross profit for the month by selecting which diamonds…arrow_forwardWhen creating financial statements, why is it essential to create the income statement before the balance sheet? O Because sales is an essential component of the balance sheet O Because net income is required to determine the balance in retained earnings Because cost of goods sold is a component of inventory O Because S&A costs are required to determine the balance in Plant & Equipment (net). O Actually, the balance sheet must always be created first and used to create the income statement.arrow_forward14. Entities must allocate the cost of all goods available for sale between a. the cost of goods on hand at the beginning and the cost of goods purchased during the period b. the cost of goods on hand at the end and the cost of goods purchased during the period c. the income statement and the statement of financial position d. all the choices are correct.arrow_forward
- As inventoriable costs expire, they become a. sales b. cost of goods sold c. operating expenses d. gross profitarrow_forwardRequired: 1. Compute cost of goods sold for each of the two items separately using the FIFO and LIFO inventory costing methods. 2. Between FIFO and LIFO, which method is preferable in terms of (a) net income and (b) income taxes paid (cash flow)? Complete this aarrow_forwardPlease refer to the picture below for the information. Please show the complete solution and kinldy include label. Thank you so much. Question 1: How much is the amount of "Cost of Goods Sold" to be reported in the 2015 Statement of comprehensive income assuming the company’s policy is to charge loss on inventory write-down to COST OF GOODS SOLD and charge loss on inventory write-down to OTHER EXPENSE, respectively. Question 2: How much is the amount of "Cost of Goods Sold" to be reported in the 2016 Statement of comprehensive income?arrow_forward
- You have the following information for Kingbird Diamonds. Kingbird Diamonds uses the periodic method of accounting for its inventory transactions. Kingbird only carries one brand and size of diamonds-all are identical. Each batch of diamonds purchased is carefully coded and marked with its purchase cost. March 1 March 3 March 5 March 10 March 25 Beginning inventory 180 diamonds at a cost of €368 per diamond. Purchased 240 diamonds at a cost of €420 each. Sold 224 diamonds for €720 each. Purchased 420 diamonds at a cost of €464 each. Sold 480 diamonds for €780 each.arrow_forwardPrepare a detailed Statement of Comprehensive Income. Arrange the title of the following account in its proper position. a. How much is the total net revenue? b. How much is the total net profit from the operation? c. How much is the total gross profit? d. How much is ?the total cost of goods soldarrow_forwardWhich of the following statements is/are FALSE: I. Because of the prudence convention, inventories are expensed in the income statement as cost of goods sold when they are sold, and not when they are bought in by the business and paid for. II. Investment property does not get depreciated, unless it is measured at cost. III. In the statement of comprehensive income, costs can be analysed according to function or nature. Costs analysed according to function are classified into the following categories: distribution & selling costs; administrative expenses; other operating expenses (or income). IV. A complete set of financial statements consists of the statement of financial position, the statement of comprehensive income, the statement of changes in equity and the statement of cash flows. V. Following the acquisition of an item of property, plant and equipment, subsequent expenditure for this item that will extend the asset's useful life and increase the asset's capacity is capitalised.…arrow_forward
- The COGS is estimated by deducting the gross profit from sales revenue. Distinguish between gross profit as a percentage of cost and gross profit as a percentage of sales price and how do you convert the gross profit % based upon cost to gross profit % based upon selling price?arrow_forwardHow does the Cost of goods sold section of the income statement differ between retail and manufacturing companies?arrow_forwardUsing the following information, prepare the Cost of Goods Sold section of an income statement.arrow_forward
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