Gross profit will be the: A. highest if LIFO is used and inventory costs are decreasing. B. highest if FIFO is used and inventory costs are increasing. C. lowest if LIFO is used and inventory costs are increasing. D. all of the above

Gross profit will be the: A. highest if LIFO is used and inventory costs are decreasing. B. highest if FIFO is used and inventory costs are increasing. C. lowest if LIFO is used and inventory costs are increasing. D. all of the above

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Description: Gross profit will be the: A.highest if LIFO is used and inventory costs are decreasing. B.highest if FIFO is used and inventory costs are increasing. C.lowest if LIFO is used and inventory costs are increasing. D.all of the above

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter10: Inventory

Section: Chapter Questions

Problem 2MC: If a company has three lots of products for sale, purchase 1 (earliest) for $17, purchase 2 (middle)...

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Similar questions

If a company has three lots of products for sale, purchase 1 (earliest) for $17, purchase 2 (middle) for $15, purchase 3 (latest) for $12, which of the following statements is true? A. This is an inflationary cost pattern. B. This is a deflationary cost pattern. C. The next purchase will cost less than $12. D. None of these statements can be verified.
In a period of rising prices,a. cost of goods sold under LIFO will be less than under FIFO.b. gross profit under FIFO will be higher than under LIFO.c. LIFO inventory will be greater than FIFO inventory.d. net income under LIFO will be higher than under FIFO.
If costs are rising, which of the following will be true?a. The cost of goods sold will be greater if LIFO is usedrather than weighted average.b. The cost of ending inventory will be greater if FIFO isused rather than LIFO.c. The gross profit will be greater if FIFO is used ratherthan LIFO.d. All of the above are true
When purchase prices are rising, which of the following statements is true? a.LIFO produces a higher cost of goods sold than FIFO. b.LIFO produces a higher cost for ending inventory than FIFO. c.FIFO produces a lower amount for net income than LIFO. d.Weighted average cost produces a higher net income than FIFO or LIFO.
If merchandise inventory is being valued at cost and the purchase price is steadily falling, which method of costing will yield the largest net income? Select one: a. average cost. b. LIFO. c. FIFO. d. weighted average. e. All methods will result in the same figure of net income.
If production is equal to sales, FG ending inventory increases therefore net income under AC and VC will be same Select one: True False
Which cost flow assumption generally results in the highest reported amount of net income when inventory costs are rising? Explain.
For each item below, indicate whether FIFO or LIFO will generally result in a higher reported amount when inventory costs are rising versus falling. The first answer is provided as an example.
Which of the following performance measures will increase if inventory decreases and all else remains the same? Return on Investment Residual Income A) Yes Yes B) No Yes C) Yes No D) No No Multiple Choice Choice A Choice B Choice C Choice D
Which method would produce the same unit cost for Inventory and Cost of Good Sold in periods of rising prices? Select one: a. Weighted Average b. FIFO c. LIFO
Which of the following statements is true with regard to the gross profit ratio? An increase in cost of goods sold would increase the gross profit ratio (assuming sales remain constant). An increase in the gross profit ratio may indicate that a company is efficiently managing its inventory. An increase in selling expenses would lower the gross profit ratio. a.1 b.2 c.1 and 2 d.2 and 3
If inventory is being valued at cost and the price level is steadily rising, which of the three methods of costing— FIFO, LIFO, or weighted average cost—will yield the lowest annual income tax expense? Explain.