10. In a period of rising prices, the FIFO method of costing inventory results in income tax savings for companies.  Select one: True False   11. When prices increase, FIFO reports higher gross profit and net incomethan LIFO. Select one: True False 12. A debit memo represents a decrease to accounts payable and therefore results in less money owed to the seller. Select one: True False

Q: This year your company has purchased less expensivemerchandise inventory but has not changed its…

A: Gross Profit is a difference between Net sales and Cost of goods sold. The formula for calculating…

Q: Identify the better performer between Best Buy and Dollar General. Calculate how much inventory the…

A: We are given some calculations regarding two companies - Best Buy and dollar General.  Based on the…

Q: SJU Resources last year reported cost of goods sold of $35 million and an inventory turnover ratio…

A: Inventory turnover ratio means the cost of goods sold divided with average stock.

Q: 2. If a company sells goods that cost P70,000 for P82,000, the firm will: a. reduce Finished-Goods…

A: Since you have asked multiple question, we will solve the first question for you. If you want any…

Q: 22.Which inventory costing method has a stabilizing effect on profit, such that during a period of…

A: There are four Methods of issue of material  1.First-in, first-out method 2.  Last-in, first-out…

Q: Can you explain why the answer is B and not C. If inventory prices are decreasing wouldnt LIFO…

A: Yes, you are right in the falling inventory prices, the LIFO method would result in the selling of…

Q: Like many technology companies, TechnoTools operates in an environment of decliningprices. Its…

A: The last in, first-out (LIFO) is a system utilized to store reports of the latest items first…

Q: Which of the following formula is correct for Gross Margin of a Merchandise Business under…

A: Gross margin: Difference between the net sales and the cost of goods sold is called gross margin.

Q: (a) provide the highest net income? (b) result in the most stable earnings over a number of years?…

A: FIFO: In First-in-First-Out method, items purchased initially are sold first. So, the value of the…

Q: 10.In periods of rising prices (inflation), the use of which of the following inventory cost flow…

A: Under first in first out method, the goods which are brought into the inventory first are sold first…

Q: True False 1. During a period of rising costs, the LIFO cost flow assumption results in lower cost…

A: LIFO means last in first out where as FIFO means first in first out. Inventory and cost of goods…

Q: Application of the lower-of-cost-or-market rule results in inconsistency because a company may value…

A: Lower of Cost or market rule states that while estimating value of the company's Inventory it is…

Q: Which of the following statements about the quality of earnings ratio is true? Multiple Choice…

A: Lets understand the basics. Quality of earning ratio indicates the cashflow from operating activity…

Q: Part One: Explanation 1. If merchandise inventory is being valued at cost and the price level is…

A: FIFO, LIFO and weighted average are different cost flow assumptions with regard to the cost of…

Q: Identify which of the statements below are true (T) or false (F). Lean businesses aim to: Reduce…

A: Lean businesses aim to: Reduce inventory levels--true

Q: 1.Given a particular set of factsand assumptions, the following pairs of amounts were computed using…

A: LIFO = Last in, First out FIFO = First in, First out A) $20,650 =FIFO$19,400 = LIFO B) $10,650 =…

Q: Samsung Electronics reports the following regarding its accounting for inventories. Inventories are…

A:

Q: Which of the following is false? Select one: a. Days’ sales in inventory is equal to the average…

A: Option “B” is False.

Q: 14. Which of the following is most likely to be a symptom of overtrading? A   Static levels of…

A: Overtrading: When a company expands too quickly without the financial capacity to support it, this…

Q: You are the manager of a successful retail operation.  Inflation has been running at 3% per year on…

A: In accounting there are different methods that we can use for accounting of inventory. The main…

Q: Which of the following statements is correct? Group of answer choices A)When cost of goods sold as a…

A: Cost of goods sold is the total costs that is used to create a product or service, which has been…

Q: Which of the following statements is true with regard to the gross profit ratio? An increase in…

A: Gross profit is an excess amount of revenue over its cost of goods sold.it measures profitability…

Q: 13.In periods of rising prices, which is an advantage of using the LIFO inventory costing method? a.…

A: LIFO method: LIFO means Last-In-Last-out. Under this method good purchased last are first issued to…

Q: Which of the following statements is false when a company sells inventory costing $700 for $1,200?…

A: a company sells inventory costing $700 for $1,200

Q: Which of the following is false? Select one: a. Day's sales in inventory is equal to the average…

A: The correct option is part (b), that is higher day’s sales in inventory means that inventory is less…

Q: In the case of decrease the operating cash cycle, which one of the following actions should be…

A: cash flow from operating activities include normal operating of firm.

Q: 2. Shepherd Cycles does not expect prices to change dramatically and wants to use a method that…

A: An inventory valuation allows a business to assign a monetary value to items in its inventory.…

Q: Th e Industry and Business Risk excerpt states that, “Increased competition may lead tolower unit…

A: If prices are decreased, write downs under FIFO are least probably to have a considerable impact as…

Inventory Valuation

Before discussing the topic inventory valuation let’s discuss the meaning of inventory. In accounting, inventory is also known as stock. Inventory means all the finished goods, materials, merchandise that a business holds for the purpose of selling it in the market with the motive of earning profit.