FIFO, Average cost, and LIFO are often used for inventory valuation purposes. Compare these methods and discuss the effects of each method in the determination of income and asset management

Q: What factors might call for inventory valuation at salesprices (net realizable value or market…

A: Inventory: Inventory refers to the stock of a business which is traded to earn profits.

Q: Which of the three methods of inventory costing -FIFO, LIFO, or weighted average cost - will in…

A: FIFO - Inventory purchased first is assumed to be sold first. LIFO - Inventory recently purchased is…

Q: Describe diff erent inventory valuation methods (cost formulas).

A: The manner in which an organization calculates the product costs (inventory value assessment)…

Q: When assessing inventory management policies, is the current ratio or acid-test ratio more…

A: Current Ratio = Current Ratio is Calculated by dividing the current Assets with current liabilties.…

Q: What is a LIFO inventory pool? How is the cost of ending inventory determined when pools are used?

A:

Q: Explain the lower of cost and net realizable value approach to valuing inventory.

A: Merchnadise Inventory: It refers to the current assets that a company expects to sell during the…

Q: For valuation of inventory, the lower of cost or market rule may be applied to a. the total…

A: Inventory of the business should be valued by choosing appropriate method. Lower of cost of market…

Q: When is LIFO Inventory a preferred method?   **In regards to Financial Accounting.

A: LIFO (Last in, First out ) : It is an accounting method that an organization uses to determine the…

Q: Discuss the effect of absorption and marginal costing on inventory valuation and profit…

A: Absorption costing also written as full costing. Under this method, all costs are considered in…

Q: Which inventory valuation model serves as a middle-of-the-road approach for taxes and income? a.…

A: Under the FIFO and LIFO, the obtained cost of goods sold can be higher or lower than the actual…

Q: Briefly explain the usefulness of the inventory figure resulting from the application of lower of…

A: Net Realizable Value(NRV) refers to the inventory value which a business entity can realize from…

Q: For commercial reasons, a weighted average and inventory system from lifo fifo should be considered.

A: The LIFO (Last in, first-out) The LIFO accounting method is used to value inventory. This method is…

Q: FIFO method to determine its cost of inventory.

A: Under FIFO method of inventory valuation, goods come first into the store are sold first.

Q: The most common approach to implementing the lower of cost or market rule for inventory valuation is…

A: Inventory means the stock of goods in which the businessmen deals. Inventory is always valued at…

Q: FIFO, average-cost, and LIFO methods are often usedinstead of specific identification for inventory…

A:

Q: Assume the perpetual inventory system is used. Determine the costs assigned to ending inventory when…

A: LIFO Method It is the method used for recording Inventory. Under this method, it is assumed that the…

Q: item-by-item basis

A: The Item by Item method utilizes the principle and calculates the value of inventory based on the…

Q: Inventory should be measured at lower of fair value and net realizable value of the inventory.

A: The IAS 2 suggests the requirement for the reporting of the inventories. This states that the…

Q: What does a “downstream” sale of inventory refer to and when is the profit recognized?

A: Downstream sale of inventory: When a parent company transfer goods to any of its subsidiaries, it is…

Q: What does an “upstream” sale of inventory refer to and when is the profit recognized?

A: Upstream sale of inventory: When a subsidiary sells goods to a parent company, is referred as…

Q: Which ratio is calculated to ascertain the efficiency of inventory management? *

A: Inventory Turnover Ratio:-This is the efficiency ratio that measures the efficiency of the company…

Q: Explain an example how to calculate net cost of inventory.

A: Net Cost of Inventory indicates the actual cost of inventory purchased. Net cost of inventory is…

Q: Explain the lower of cost or market rule for inventory valuation and explain why it is GAAP.

A: Lower of cost or market value for inventory valuation is just a mixture of many accounting…

Q: Which inventory valuation model serves as a middle-of-the-road approach for taxes and income?…

A: When a corporation values its inventory using FIFO, it reports reduced COGS, which boosts its gross…

Q: Under IFRS, which of the following methods is not acceptable for the valuation of inventory? a.…

A:

Q: When using the periodic inventory system and weighted-average inventory costing method, when is the…

A: Periodic inventory system: The method or system of recording the transactions related to inventory…

Q: What method of inventory valuation should be used for economic decision-making problems?

A: Inventory valuation is necessary for ascertaining the accurate cost of inventory so that accurate…

Q: What is the purpose of disclosing the difference between the reported LIFO inventory amounts and…

A: Perpetual and periodic inventory system: In merchandise business, there are two types of inventory…

Q: How is the net cost of inventory calculated?

A: Merchandise Inventory: Merchandise is the stock of goods bought by a wholesaler, or a retailer, or a…

Q: What is the measurement value of inventory? Select one: a. Expected Value b. Fair Value c.…

A: Inventory are the goods which the businesses held for the sale.

Q: Which of the three methods of inventory costing— FIFO, LIFO, or weighted average cost—will in…

A: First-In-First-out (FIFO): FIFO is a method used for recording inventory sold. In this method the…

Q: Complete the table below for the transactions provided using the following methods of inventory…

A: Working (FIFO)   Computation

Q: Explain the gross profit method of estimating ending inventory.

A: Gross Profit: It refers to the difference between the sales and the cost of goods sold.

Q: What will be the correct answer for weight average cost method for ending inventory and cost of…

A: Weighted average Cost per unit=11-6×$70+14×$10511-6+14=$182019=$95.79

Q: Determine the value of the inventory at the lower of cost or market by applying lower of cost or…

A:

Q: Explain the term inventory turnover ratio.

A: Definition:   Ratio analysis: One of the techniques of financial statement analysis is ratio…

Q: nventory valuation is used to calculate the cost of goods sold and cost of ending inventory. The…

A: First in First out Method This is one of the popular method of inventory valuation.  While using…

Q: Differentiate between the specific identification, FIFO, LIFO, and average cost methods used to…

A: Inventory cost flow assumptions: These are the methods used by the companies to compute the cost…

Q: The inventory valuation method which assumes that the items purchased first are the first items to…

A: Valuation of an inventory depends upon which items are sold first in the inventory cycle. This gives…