Case Study: Phil Barely has his own business. He recently heard that there are different methods of valuing inventory and that some methods result in a lower net income, which can mean lower taxes. He sees a wonderful opportunity to minimize inventory value and net income by changing his inventory costing method each year. Directions: In writing explain to Phil why he would be violating an accounting principle if he implemented his idea. (Hint: Don’t forget to include the basis of your discussion, the accounting principle).

Q: An accounting intern for a local CPA firm was reviewing the financial statements of a client in the…

A: LIFO: Under this inventory method, the units that are purchased last, are sold first. Thus, it…

Q: Your client, HillTop, is a retailer of women's clothing. It has increased sales during the holiday…

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Q: Neelam has decided to manage inventory to enhance the efficiency of the firm. her dicision has come…

A: The top three techniques to manage inventories are as given below: Just in Time: It slashes the…

Q: Ace Company is a retailer operating in an industry that experiences inflation (rising prices). Ace…

A: Companies using FIFO method for inventory valuation , reports higher inventory which generally leads…

Q: As a student of economics you are well aware of the inflation problem. Especially in this time since…

A: The valuation of inventory is necessary to ascertain the cost of inventory, the cost of goods…

Q: In conducting year-end inventory counts, your audit team is debating the impact of the client's…

A: Since you have posted a question with multiple sub-parts, we will solve the first three sub-parts…

Q: You are an accounting student at Berkeley College and will not graduate for another year. But…

A: There are two ways we could send goods to the buyer. The one way is to send it through FOB…

Q: If the company had used the FIFO inventory costing method, cost of goods sold under FIFO would have…

A: Inventory Valuation Methods are methods of valuation of inventory. There are three methods of…

Q: You have just been hired as a consultant to Gilbert Industries, a newly formed company. The company…

A: LIFO: Under this inventory method, the units that are purchased last, are sold first. Thus, it…

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: As a new account assistant, Miss Fizah has been assigned to calculate the amount that should appear…

A: Here asked for multi sub part question we will solve first three sub part question for you.  If you…

Q: You are the financial officer for Music Plus, a retailer that sells goods for home entertainment…

A: Inventory: Inventory consist of total of three components: raw material, work-in-process and…

Q: AZO Co. currently uses a periodic inventory system. Mr. Sohaim, the owner, is considering the…

A: Periodic Inventory System:-It is a system in which inventory is valued at a specific period of time.…

Q: The following example was provided to encourage the use of the LIFO method. In a nutshell, LIFO…

A: “Hey, since there are multiple questions posted, we will answer first three questions. If you want…

Q: What critical assumptions has TESLA made to value inventory? Does TESLA use FIFO or LIFO? Explain…

A: Inventory Valuation There are different method which are adopted in the valuation of the inventory.…

Q: Alice Judy operates a chain of beauty-products retail stores. Her stock holding carries several…

A: Categories under ABC Analysis 80% of Inventory Value = Category A 15% of Inventory Value = Category…

Q: The CEO of a firm is giving an annual statement in front of shareholders. The company sells two…

A: Introduction:- A company's CEO makes an annual statement in front of the shareholders. The firm…

Q: perpetual inventory updating? Can you present a persuasive argument for the benefits of perpetual?…

A: Periodic Inventory System vs Perpetual Inventory System Periodic Inventory system refers to the…

Q: You have just been hired as a consultant to Tangier Industries, a newly formed company. The company…

A: LIFO and FIFO:

Q: Closing inventory should be valued at the lower of cost and net realisable value. Costs includes all…

A: As per IFRS 2 Inventory , Closing Inventory is to be measured at lower cost or Net relizable value.…

Q: My text book is  Hospitality Industry Financial Accounting (4th edition). I am in chapter 10 --…

A: Effect of errors on cost of goods sold (COGS) and net income:

Q: Al Dhahira is a public limited company working since 2000. The company wants to adapt the current…

A: Following is the answer to the given question

Q: Electronics, Inc. is a high-volume, wholesale merchandising company. Most of its inventory turns…

A: The principle of conservatism is recognised globally in almost all countries for the purposes of…

Q: Barber Technologies designs and develops software to be used for the management of inventory by both…

A: Barber Technologies designs and develops software to be used for the management of inventory by both…

Q: A business may need to estimate its amount of inventory because perpetual inventory records are not…

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

Q: Phil Barely has his own business. He recently heard that there are different methods of valuing…

A: Inventory valuation indicates the method adopted by the business entity for calculating the value…

Q: A Retail Company sells various products related to pop culture. Since trends change the market price…

A: The lower cost or market method state that inventory should be valued at lower value from book cost…

Q: Company A uses the FIFO method to cost inventory and Company B uses the LIFO method. Thetwo…

A: Inventory:   Inventory refers to the raw materials, work-in process, and the finished goods…

Q: Title You conclude that Janice is incorrect. Write a brief, tactful memo to Janice, clarifying the…

A: Errors in recording the balances of accounts can affect the financial statements as the components…

Q: Ethics Case Electronics, Inc. is a high-volume, wholesale merchandising company. Most of its…

A: 1. Is the accountant correct in her treatment of the inventory ? Why or why not ? (1) Accountant is…

Q: What should Margie do in this situation? Why?

A: Mar should take note to the next level of management when still her manager disagrees to report the…

Q: The president of your company wants you to count merchandise inventory from the factory in…

A:

Q: Directions: Read the following sentences. Write the letter “T” if the statement is True and “F” if…

A: LCNRV is lower of cost and net realizable value.

Q: Margie Johnson is a staff accountant at ToolEx Company, a manufacturer of tools and equipment.  The…

A: The Boss is in favor of not to report inventory shrinkage, it is ethically wrong if Margie Johnson…

Q: Retailers need merchandise to make sales. In fact, a retailer’s inventory is its biggest asset. Not…

A: Stock turn rate refers to the rate which shows the number of times the business turned over and is…

Q: You are a financial adviser with a client in the wholesale produce business that just completed its…

A: There can be two possibilities to record increasing trend of profit that is by FIFO method and by…

Q: Markus Mrotek is the owner of Mrotek Co., a sole proprietorship. Mrotek is a wholesaler which buys…

A: LIFO, FIFO and weighted average method. Under the LIFO method, the inventory purchased recently is…

Q: Retailers need merchandise to make sales. In fact, a retailer’s inventory is its biggest asset. Not…

A: Stock turnover rate is the rate which a business computes in order to determine and know about how…

Q: Read the following sentences. Write the letter “T” if the statement is True and “F” if the statement…

A: Net realizable value (NRV) refers to the value of an asset which is realized while selling of the…

Q: A retail business like Best Buy experiences some loss of inventory due to shoplifting, employee…

A: The inventory difference may occur due to theft, shrinkage, fire, process loss, etc

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.