Concept explainers
(a)
Inventory turnover ratio: This is a financial measure that is used to evaluate as to how many times a company sells or uses its inventory during an accounting period. It is calculated by using the following formula:
Days in inventory: Days in inventory are used to determine number of days a particular company takes to make sales of the inventory available with them.
LIFO Reserve: It is a contra inventory account that shows the difference between the inventory cost under FIFO and inventory cost under LIFO. This account is recorded when a company uses FIFO method for its
To Compute: The inventory turnover and days in inventory of Company G.
(b)
To Compute: The
(c)
To Compute: The current ratio after adjusting the LIFO reserve.
(d)
To Comment: on the difference between the current ratio based on inventory using LIFO and the current ratio after adjusting for the LIFO reserve.

Want to see the full answer?
Check out a sample textbook solution
Chapter 6 Solutions
FIN.ACCT-TOOLS F/DECI.MAKERS-TEXT+WILEY+
- Internal controls are the rules and procedures that a company develops and implements. These controls help to maintain the accountability and integrity of the accounting information as well as help to prevent fraud. There are many objectives of a well-designed internal control structure in an organization. These include having a controlled environment, assessing risks, and monitoring. An example of a control that I personally use would be in our register system. Every night, the evening cook/helper counts down the cash register drawer and lets me know how much cash was in the drawer over the amount that we leave in it every night of $125. The next morning, I compare the information from the cash register balance sheet to the computer system to ensure all numbers match up. These numbers are then recorded daily into a monthly spreadsheet that we ensure balances at the end of the month. Respond to ally's postarrow_forwardPlease give me correct answer this financial accounting questionarrow_forwardInternal control in a business organization and the reporting of cash on the balance sheet as well as managing receivables and estimating uncollectible accounts is important. What is internal control, and what are the objectives of a well-designed internal control structure in an organization?arrow_forward
- College Accounting (Book Only): A Career ApproachAccountingISBN:9781337280570Author:Scott, Cathy J.Publisher:South-Western College PubPrinciples of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax CollegeCollege Accounting, Chapters 1-27AccountingISBN:9781337794756Author:HEINTZ, James A.Publisher:Cengage Learning,
- Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College PubFinancial AccountingAccountingISBN:9781305088436Author:Carl Warren, Jim Reeve, Jonathan DuchacPublisher:Cengage LearningManagerial Accounting: The Cornerstone of Busines...AccountingISBN:9781337115773Author:Maryanne M. Mowen, Don R. Hansen, Dan L. HeitgerPublisher:Cengage Learning




