First-in-First-Out: In First-in-First-Out method, the costs of the initially purchased items are considered as cost of goods sold, for the items which are sold first. The value of the ending inventory consists of the recent purchased items. Last-in-Last-Out: In Last-in-First-Out method, the costs of last purchased items are considered as the cost of goods sold, for the items which are sold first. The value of the closing stock consists of the initial purchased items. The Income statement: The income statement is a financial statement that shows the net income earned or net loss suffered by a company through reporting all the revenues earned, and expenses incurred by the company over a specific period of time. An income statement is also known as an operation statement, an earning statement, a revenue statement, or a profit and loss statement. The net income is the excess of revenue over expenses. To Prepare: The comparative condensed income statements for 2019 under FIFO and LIFO.

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Answer 1

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 6, Problem 6.7AP

(a)

To determine

First-in-First-Out:

In First-in-First-Out method, the costs of the initially purchased items are considered as cost of goods sold, for the items which are sold first. The value of the ending inventory consists of the recent purchased items.

Last-in-Last-Out:

In Last-in-First-Out method, the costs of last purchased items are considered as the cost of goods sold, for the items which are sold first. The value of the closing stock consists of the initial purchased items.

The Income statement:

The income statement is a financial statement that shows the net income earned or net loss suffered by a company through reporting all the revenues earned, and expenses incurred by the company over a specific period of time. An income statement is also known as an operation statement, an earning statement, a revenue statement, or a profit and loss statement. The net income is the excess of revenue over expenses.

To Prepare: The comparative condensed income statements for 2019 under FIFO and LIFO.

(b) (1)

To determine

To Explain: the reason for the method of inventory cost flow, which produces the more meaningful inventory amount for the balance sheet.

(2)

To determine

To Explain: the reason for the method of inventory cost flow, which produces the more meaningful net income.

(3)

To determine

To Explain: the reason for the method of inventory cost flow which is most likely to approximate the actual physical flow of the goods.

(4)

To determine

To explain: the reason for the excess of cash available under LIFO than under FIFO.

(5)

To determine

The amount of gross profit which is illusory in FIFO in comparison with the gross profit under LIFO.

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Creditors Sales Revenue 22,500 1,143,700 Land at cost 550,000 Building at cost 570,000 Furniture and fittings at cost 85,000 Bank 14,000 Provision for Depreciation Buildings 120,000 Furniture and fittings 15,000 Discounts 5,700 5,800 Retained Earnings at 1 Oct 2022 14,800 Provision for bad debts 2,200 Goodwill 400,000 Cash 16,400 Inventory at 1 Oct 2022 48,000 Rent Received(from Breezy Ltd) 27,000 Rent 7,900 Wages and Salaries 122,000 Insurance 16,300 Carriage Inwards 2,300 Returns 8,500 12,000 Commission received 5,200 8% Mortgage 100,000 Other Operating Expenses 2,500 Debtors 45,000 Purchases 340,000 Debenture Interest 1,200 Mortgage Interest 4,600 Bad debt 4,700 7% Debentures 150,000 4% Preference Shares @ $0.5 130,000 Ordinary Shares @ $0.75 375,000 General Reserves 127,000 Interim ordinary dividends paid 4,500 2,249,400 2,249,400

I need help with this general accounting problem using proper accounting guidelines.

Can you explain this general accounting question using accurate calculation methods?

Answer 2

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 6, Problem 6.7AP

(a)

To determine

First-in-First-Out:

In First-in-First-Out method, the costs of the initially purchased items are considered as cost of goods sold, for the items which are sold first. The value of the ending inventory consists of the recent purchased items.

Last-in-Last-Out:

In Last-in-First-Out method, the costs of last purchased items are considered as the cost of goods sold, for the items which are sold first. The value of the closing stock consists of the initial purchased items.

The Income statement:

The income statement is a financial statement that shows the net income earned or net loss suffered by a company through reporting all the revenues earned, and expenses incurred by the company over a specific period of time. An income statement is also known as an operation statement, an earning statement, a revenue statement, or a profit and loss statement. The net income is the excess of revenue over expenses.

To Prepare: The comparative condensed income statements for 2019 under FIFO and LIFO.

(b) (1)

To determine

To Explain: the reason for the method of inventory cost flow, which produces the more meaningful inventory amount for the balance sheet.

(2)

To determine

To Explain: the reason for the method of inventory cost flow, which produces the more meaningful net income.

(3)

To determine

To Explain: the reason for the method of inventory cost flow which is most likely to approximate the actual physical flow of the goods.

(4)

To determine

To explain: the reason for the excess of cash available under LIFO than under FIFO.

(5)

To determine

The amount of gross profit which is illusory in FIFO in comparison with the gross profit under LIFO.

Expert Solution & Answer

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Check out a sample textbook solution

See solution

Answer 3

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 6, Problem 6.7AP

(a)

To determine

First-in-First-Out:

In First-in-First-Out method, the costs of the initially purchased items are considered as cost of goods sold, for the items which are sold first. The value of the ending inventory consists of the recent purchased items.

Last-in-Last-Out:

In Last-in-First-Out method, the costs of last purchased items are considered as the cost of goods sold, for the items which are sold first. The value of the closing stock consists of the initial purchased items.

The Income statement:

The income statement is a financial statement that shows the net income earned or net loss suffered by a company through reporting all the revenues earned, and expenses incurred by the company over a specific period of time. An income statement is also known as an operation statement, an earning statement, a revenue statement, or a profit and loss statement. The net income is the excess of revenue over expenses.

To Prepare: The comparative condensed income statements for 2019 under FIFO and LIFO.

(b) (1)

To determine

To Explain: the reason for the method of inventory cost flow, which produces the more meaningful inventory amount for the balance sheet.

(2)

To determine

To Explain: the reason for the method of inventory cost flow, which produces the more meaningful net income.

(3)

To determine

To Explain: the reason for the method of inventory cost flow which is most likely to approximate the actual physical flow of the goods.

(4)

To determine

To explain: the reason for the excess of cash available under LIFO than under FIFO.

(5)

To determine

The amount of gross profit which is illusory in FIFO in comparison with the gross profit under LIFO.

Expert Solution & Answer

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Check out a sample textbook solution

See solution

Answer 4

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 6, Problem 6.7AP

(a)

To determine

First-in-First-Out:

In First-in-First-Out method, the costs of the initially purchased items are considered as cost of goods sold, for the items which are sold first. The value of the ending inventory consists of the recent purchased items.

Last-in-Last-Out:

In Last-in-First-Out method, the costs of last purchased items are considered as the cost of goods sold, for the items which are sold first. The value of the closing stock consists of the initial purchased items.

The Income statement:

The income statement is a financial statement that shows the net income earned or net loss suffered by a company through reporting all the revenues earned, and expenses incurred by the company over a specific period of time. An income statement is also known as an operation statement, an earning statement, a revenue statement, or a profit and loss statement. The net income is the excess of revenue over expenses.

To Prepare: The comparative condensed income statements for 2019 under FIFO and LIFO.

(b) (1)

To determine

To Explain: the reason for the method of inventory cost flow, which produces the more meaningful inventory amount for the balance sheet.

(2)

To determine

To Explain: the reason for the method of inventory cost flow, which produces the more meaningful net income.

(3)

To determine

To Explain: the reason for the method of inventory cost flow which is most likely to approximate the actual physical flow of the goods.

(4)

To determine

To explain: the reason for the excess of cash available under LIFO than under FIFO.

(5)

To determine

The amount of gross profit which is illusory in FIFO in comparison with the gross profit under LIFO.

Expert Solution & Answer

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Answer 5

Chapter 6, Problem 6.7AP

(a)

To determine

First-in-First-Out:

In First-in-First-Out method, the costs of the initially purchased items are considered as cost of goods sold, for the items which are sold first. The value of the ending inventory consists of the recent purchased items.

Last-in-Last-Out:

In Last-in-First-Out method, the costs of last purchased items are considered as the cost of goods sold, for the items which are sold first. The value of the closing stock consists of the initial purchased items.

The Income statement:

The income statement is a financial statement that shows the net income earned or net loss suffered by a company through reporting all the revenues earned, and expenses incurred by the company over a specific period of time. An income statement is also known as an operation statement, an earning statement, a revenue statement, or a profit and loss statement. The net income is the excess of revenue over expenses.

To Prepare: The comparative condensed income statements for 2019 under FIFO and LIFO.

(b) (1)

To determine

To Explain: the reason for the method of inventory cost flow, which produces the more meaningful inventory amount for the balance sheet.

(2)

To determine

To Explain: the reason for the method of inventory cost flow, which produces the more meaningful net income.

(3)

To determine

To Explain: the reason for the method of inventory cost flow which is most likely to approximate the actual physical flow of the goods.

(4)

To determine

To explain: the reason for the excess of cash available under LIFO than under FIFO.

(5)

To determine

The amount of gross profit which is illusory in FIFO in comparison with the gross profit under LIFO.

Answer 6

Chapter 6, Problem 6.7AP

(a)

To determine

First-in-First-Out:

In First-in-First-Out method, the costs of the initially purchased items are considered as cost of goods sold, for the items which are sold first. The value of the ending inventory consists of the recent purchased items.

Last-in-Last-Out:

In Last-in-First-Out method, the costs of last purchased items are considered as the cost of goods sold, for the items which are sold first. The value of the closing stock consists of the initial purchased items.

The Income statement:

The income statement is a financial statement that shows the net income earned or net loss suffered by a company through reporting all the revenues earned, and expenses incurred by the company over a specific period of time. An income statement is also known as an operation statement, an earning statement, a revenue statement, or a profit and loss statement. The net income is the excess of revenue over expenses.

To Prepare: The comparative condensed income statements for 2019 under FIFO and LIFO.

Answer 7

Chapter 6, Problem 6.7AP

(a)

To determine

First-in-First-Out:

In First-in-First-Out method, the costs of the initially purchased items are considered as cost of goods sold, for the items which are sold first. The value of the ending inventory consists of the recent purchased items.

Last-in-Last-Out:

In Last-in-First-Out method, the costs of last purchased items are considered as the cost of goods sold, for the items which are sold first. The value of the closing stock consists of the initial purchased items.

The Income statement:

The income statement is a financial statement that shows the net income earned or net loss suffered by a company through reporting all the revenues earned, and expenses incurred by the company over a specific period of time. An income statement is also known as an operation statement, an earning statement, a revenue statement, or a profit and loss statement. The net income is the excess of revenue over expenses.

To Prepare: The comparative condensed income statements for 2019 under FIFO and LIFO.

Answer 8

(b) (1)

To determine

To Explain: the reason for the method of inventory cost flow, which produces the more meaningful inventory amount for the balance sheet.

Answer 9

(b) (1)

To determine

To Explain: the reason for the method of inventory cost flow, which produces the more meaningful inventory amount for the balance sheet.

Answer 10

(2)

To determine

To Explain: the reason for the method of inventory cost flow, which produces the more meaningful net income.

Answer 11

(2)

To determine

To Explain: the reason for the method of inventory cost flow, which produces the more meaningful net income.

Answer 12

(3)

To determine

To Explain: the reason for the method of inventory cost flow which is most likely to approximate the actual physical flow of the goods.

Answer 13

(3)

To determine

To Explain: the reason for the method of inventory cost flow which is most likely to approximate the actual physical flow of the goods.

Answer 14

(4)

To determine

To explain: the reason for the excess of cash available under LIFO than under FIFO.

Answer 15

(4)

To determine

To explain: the reason for the excess of cash available under LIFO than under FIFO.

Answer 16

(5)

To determine

The amount of gross profit which is illusory in FIFO in comparison with the gross profit under LIFO.

Answer 17

(5)

To determine

The amount of gross profit which is illusory in FIFO in comparison with the gross profit under LIFO.

Answer 18

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Answer 19

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Answer 20

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Answer 21

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To Explain: the reason for the method of inventory cost flow, which produces the more meaningful inventory amount for the balance sheet.

To Explain: the reason for the method of inventory cost flow, which produces the more meaningful net income.

To Explain: the reason for the method of inventory cost flow which is most likely to approximate the actual physical flow of the goods.

To explain: the reason for the excess of cash available under LIFO than under FIFO.

The amount of gross profit which is illusory in FIFO in comparison with the gross profit under LIFO.

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