The gross profit method and retail inventory methodC Are both estimates of ending inventory and cost of goods soldBoth use the lower of cost or fair market value of inventory in the calculationsBoth use the present value of future cash flowsC Have nothing in common. One is to determine profit and the other is to determine retailselling price

In company, there is a requirement of valuation of the inventory to find out the cost of the goods…

Answered: The gross profit method and retail…

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter6: Cost Of Goods Sold And Inventory

Section: Chapter Questions

Problem 36BE: Effects of Inventory Costing Methods Refer to the information for Tyler Company above. Required: 1....

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Similar questions

When would using the FIFO inventory costing method produce higher inventory account balances than the LIFO method would? A. inflationary times B. deflationary times C. always D. never
In rimes of rising prices, the inventory cost method that will yield the highest cost of goods sold is (a) LIFO. (b) weighted-average. (c) FIFO. (d) none of the above.
Effects of Inventory Costing Methods Refer to the information for Tyler Company above. Required: 1. Which inventory costing method produces the highest amount for net income? 2. Which inventory costing method produces the lowest amount for taxes? 3. Which inventory costing method produces the highest amount for ending inventory? 4. How would your answers to Requirements 1-3 change if inventory prices declined during the period?
Identify items missing in determining cost of goods sold For (a) through (e), identify the items designated by X and Y. A. Purchases (X + Y) = Net purchases B. Net purchases + X = Cost of inventory purchased C. Inventory (beginning) + Cost of inventory purchased = X D. Inventory available for sale X = Cost of inventory before estimated returns E. Cost of goods sold before estimated returns X = Cost of goods sold
Which of the following regarding the lower of cost ormarket rule for inventory are true?(i) The lower of cost or market rule is an example of thehistorical cost principle.(ii) When the market value of inventory drops belowthe original cost of inventory shown in the financialrecords, net income is reduced.(iii) When the market value of inventory drops belowthe original cost of inventory shown in the financialrecords, total assets are reduced.a. (i) only c. (ii) and (iii)b. (ii) only d. All of the above
Which one of the following statements is true? a. Under conditions of rising prices, the LIFO method results in lower income than the FIFO method. b. In most cases, the LIFO method approximates the physical flow of items in inventory. c. The LIFO mthod produces a higher ending inventory value than the FIFO method. d. The FIFO method excludes holding gains from income
During times of inflation, which of these inventory accounting methods is best for cash flow? JUST EXPLAIN ONE ANSWER WHICH IS INCORRECT. FIFO, because the cheapest goods are recorded as being sold first, resulting in lower cost of goods sold and higher reported net income. LIFO, because the most expensive goods are recorded as being sold first, resulting in a higher cost of goods sold and a lower reported net income. It doesn’t matter which you use since cash flow is unaffected by the choice of inventory identification method.
A company records inventory at gross invoice price. Theoretically, how should the following affect the cost of inventory? Interest on inventory loan Cash discount available Group of answer choices No effect No effect Increase No effect No effect Decrease Increase Decrease
TAD, Inc. uses the LIFO-lower of cost or market method to value inventory. If the inventory value is replacement cost, which one of the following statements is true? Multiple Choice Historical cost is less than replacement cost. Replacement cost is greater than net realizable value less a normal profit margin. Replacement cost is greater than historical cost. Net realizable value is greater than historical cost.
Assuming no beginning inventory, what can be said about the trend ofinventory prices if cost of goods sold computed when inventory is valuedusing the FIFO method exceeds cost of goods sold when inventory isvalued using the LIFO method? a. Prices decreased.b. Prices remained unchanged.c. Prices increased.d. Price trend cannot be determined from information given.
Under the lower of cost or market inventory valuation rule, market value of inventory is defined as: a.Net realizable value. b.Net realizable value minus a normal profit margin. c.The lower of net realizable value or current replacement cost. d.Current replacement cost.
1. Which one of the following types of costs is most likely to be included in determining the cost of inventory?a. Freight-inb. Interest cost for amounts borrowed to finance the purchase of inventoryc. Freight-outd. Marketing cost 2. Which of the following equation is correct and used in costing?a. Beginning Inventory + Purchases + Ending Inventory = Cost of Goods Soldb. Cost of Goods Sold - Ending Inventory - Purchases = Beginning Inventoryc. Cost of Goods Sold + Ending Inventory - Beginning Inventory = Purchasesd. Beginning Inventory + Cost of Goods Sold - Purchases = Ending Inventory

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