Required: a. Explain why "better matching" occurs with LIFO. b. What is the impact on the carrying value of inventory in the balance sheet when LIFO rather than FIFO is used during periods of inflation?

Q: Which of the following statements about the use of the FIFO assumption is NOT true?   a.   The…

A: Solution: "The FIFO assumption produces inventory asset values that are based on older purchase…

Q: Which of the following statements about the LIFO Reserve Disclosure is NOT true?  a. Usually, FIFO…

A: The credit balance in the LIFO reserve reports the difference since the time that LIFO was adopted.…

Q: In a period of rising prices, the inventory method which tends to give the highest reported…

A: During a period of rising prices FIFO Method is expected to give highest reported inventory as in…

Q: Which cost formula for inventory best reflects the current value of inventory on the balance sheet?…

A: inventory valuation methods are based on the flow of inventory. There are mainly four methods of…

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: Which of the following assumptions is assumed in the percent of sales forecasting method?     All…

A: The percent of sales method is a financial forecasting system in which all of a business's accounts…

Q: During times of inflation, which of these inventory accounting methods is best for cash flow? JUST…

A: given information   need to find the incorrect statement in the below-given options given in the…

Q: Compared to using the FIFO method to account for inventory, during periods of risingprices, a…

A: USING OF LIFO METHOD

Q: Which inventory method provides a better matching ofcurrent costs with sales revenue on the income…

A: Inventory valuation is a method of finding the actual cost of the goods left unsold at the end of a…

Q: How much is the total cost of inventory to be presented in the financial position of XYZ?

A: Inventory valuation is done by the Business Entity as per the rules prescribed under the Relevant…

Q: Explain how the inventory cost flow assumption that was utilized might have an impact on liquidity…

A: Inventory Cost Flow Assumptions refer to the many ways for determining the cost of inventory sold…

Q: Which inventory system provides a better matching of revenue and expenses - Weighted Average, Moving…

A: Following is the answer to given problem

Q: Describe implications of valuing inventory at net realizable value for financial statementsand…

A: Net realizable value means the value at which the inventory can be sold in the market reduced by the…

Q: Which income statement account(s) would be affected by a policy choice at the same time as the…

A: Inventory is directly related to the cost of goods sold. To change the policy of valuation of…

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: 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: Which of the following inventory cost flow assumptions produces the same ending inventory values…

A: Periodic inventory system is a system where inventory records are updated on a periodic basis but in…

Q: 1, how can assets and liabilities be classified for a more informative balance sheet?

A: Introduction :- A classified balance sheet is a financial statement with classifications like…

Q: Which of the following inventory cost flow assumptions produces the same ending inventory values…

A: Periodic Inventory System : In periodic inventory system ending balance of inventory will be updated…

Q: ith inflation, what are the implications of using LIFO and FIFO inventory methods? How do they…

A: FIFO: First in, first out (FIFO) is a method of asset management and valuation in which assets…

Q: nsidered when not only counting inventory, but likewise in the final valuation of inventory?  Why is…

A: Inventory is the goods lying in the stock of the entity which is either purchased or produced, ready…

Q: Which of the following is not utilized by lenders to control inventory that is being used in…

A: Trust receipts are not utilised by lenders.

Q: Which of the following is not an element of the financial statements?A. future potential sales price…

A: Financial statements seem to be reports generated by a corporation's management to demonstrate the…

Q: Based on the above information, answer questions below. @ Using Time-Series Analysis, comment on the…

A: Time series analysis of financial numbers mean determining the trend associated with the financial…

Q: Explain how liquidity measures can be influenced by the inventory cost flow assumption used.

A: Inventory Cost Flow Assumptions means the different techniques of measurement of cost of inventory…

Q: Explain an example how to calculate inventory turnover ratio.

A: Inventory turnover ratio : Inventory turnover is used to find how many times a company sold its…

Q: During times of inflation why does the value of inventory change between FIFO and LIFOevaluations?

A: A company uses various methods for valuing the ending inventory. The different methods can be…

Q: Indicate by a (1), (2), or (0) whether each of the following events wouldprobably cause average…

A: Average annual inventory holding is a relationship between average inventory and cost of goods sold…

Q: Explain briefly the application of the LCM rule to ending inventory. Describe its effect on the…

A:

Q: During a period of inflation, an account balance remains constant. With respect to this account, a…

A: Monetary items refers to those assets and liabilities whose value can be measured and expressed in…

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: When inventory is sold on account, which of the following is true? Operating cash flows are…

A: When inventory has been sold out , the inventory would be decrease with cost price , account…

Q: If the book inventory is larger than the physical inventory, the difference is known as Reduction…

A: A reduction occurs when a thing is made smaller or less in size or amount. An overage occurs when…

Q: Describe the assumptions of inventory cash flows.

A: The inventory cost flow assumption states that the cost of an inventory item changes from when it is…

Q: How would the following transactions affect the current ratio and the acid-test ratio? (a) Purchase…

A: Current ratio is the ratio between the current assets and current liabilities. It shows the…

Q: For companies using FIFO or LIFO, inventory on the balance sheet is valued at: OA. Replacement cost.…

A: The question is based on the concept of Accounting Standard on Inventory Valuation.

Q: TRUE OR FALSE? Current Assets differ from Quick assets when it comes to inventory.

A: Total Assets: Total Assets is the summation of short term assets and long term assets where former…

Q: Which of the following statements about the use of the FIFO assumption is NOT true? a.The FIFO…

A: In FIFO method  the opening  and earliest goods will be sold first.

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.