Concept explainers
Videos
Inventory: Inventory refers to the stock or goods which will be sold in the near future and thus is an asset for the company. It comprises of the raw materials which are yet to be processed, the stock which is still going through the process of production and it also includes completed products that are ready for sale. Thus inventory is the biggest and the important source of income and profit for the business.
First in first out: In case of First in, first out method, also known as FIFO method, the inventory which was bought first will also be the first one to be taken out.
Last in first out: In case of Last in, First out, also known as LIFO method, the inventory which was bought in the last will be taken out first.
Inventory turnover ratio: It depicts the fraction of inventory sold or used by the company within a fiscal year. It states a ratio which shows the number of times goods were sold during an accounting period which thereby states the productivity or the efficiency level of the company regarding the inventory which apparently is the biggest asset for the company.
Days’ sales in inventory: It indicates the days taken up by the company to convert the stock items into actual sales.
1.
To compute: Current ratio, inventory turnover and days’ sales in inventory for 2017 as per:
(a) LIFO numbers
(b) FIFO numbers
2.
To interpret: Results of part 1.
Want to see the full answer?
Check out a sample textbook solution
Chapter 5 Solutions
FINANCIAL & MANAGERIAL ACCOUNTING
- Net income isarrow_forward25. General Accounting Problem: The liabilities of Ula Company are $87,060. Also, common stock account is $145,800, dividends are $91,610, revenues are $443,250, and expenses are $316,360. What is the amount of Ula Company's total assets?arrow_forwardI need help with this solution and accounting questionarrow_forward
- General accounting questionarrow_forwardSaint Industries acquired a patent on August 1, 2022. Saint paid cash of $104,000 to the seller. Legal fees of $3,600 were paid related to the acquisition. What amount should be debited to the patent account?arrow_forwardsolve this question with explanationarrow_forward
- Ridgeway Enterprises owns stock in Pinnacle Inc. and has an operating income of $180,000 and operating expenses of $240,000 for the year. Pinnacle Inc. pays Ridgeway a dividend of $120,000. What amount of dividends received deduction may Ridgeway claim if it owns 30% of Pinnacle’s stock?arrow_forwardWhat amount sahe have to pay per yeararrow_forwardNeed Help And Solutions Get Correct Answer of all Questions Without Fail Don't Use Aiarrow_forward
AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,
Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSON
Intermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill Education
Financial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education