Which inventory method will result in lower net income in a period of rising prices? Which inventory method will result in lower net income in a period of falling prices?

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: Assuming no beginning inventory, what is the trend of inventory prices if cost of goods sold…

A: Definition:   First-in-First-Out (FIFO): In this method, items purchased initially are sold first.…

Q: Which inventory valuation method would yield the lowest cost of goods sold in periods of rising…

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

Q: 7 During a period of steadily rising prices, which one of the following inventory valuation methods…

A: Hi student Since there are multiple questions, we will answer only first question. If you want…

Q: 5. If a unit of inventory has declined in value below original cost, but the market value exceeds…

A: The procedure of determining the actual value of inventories at the end of the year is known as…

Q: Which of the following statements is correct? Group of answer choices A)The choice of an inventory…

A: SOLUTION AVERAGE COST METHOD IS USED TO CALCULATE THE COST OF INVENTORY AT THE END AND ALSO THE COST…

Q: Which of the following variations of the reail inventory method would generally result in the lowest…

A: FIFO is a method used to value inventories. In First-In-First-Out (FIFO) method the cost of the…

Q: When would using the FIFO inventory costing method produce higher inventory account balancesthan the…

A: Inventory is one of the important asset for the business. Valuation and management of inventory is…

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 of the following statements is NOT true of Economic Order Quantity? O A. The economic order…

A: EOQ: Economic Order Quantity is basically the optimal quantity of number of orders which in turn…

Q: Which of the following statements regarding the lower of cost and net realizable value (LCNRV) rule…

A: The rule of valuing the inventory at cost or net realizable value is also called as Prudence concept…

Q: Which of the following variations of the retail inventory method would generally result in the…

A: Rising prices basically means the situation where the prices of inventory keep on rising with each…

Q: Overstating ending inventory in the current year causes net income in the current year to be…

A: 1. True 2. False The weighted-average cost includes both beginning inventory and purchases and is…

Q: Which inventory costing method results in the lowest net income during a period of rising inventory…

A: Answer:LIFO is the correct option

Q: Explain inventory turnover? Can this be too high ever

A: Inventory turnover ratio means the time old inventory is replaced with new inventory with in a year.…

Q: Can an inventory turnover be too high?

A: The inventory turnover ratio is nothing but the number of times an entity is replacing the goods. It…

Q: Explain the purpose of the inventory turnover ratio? Is it possible for a firm to have a high…

A: In finance we make use of various financial ratios to determine the financial health of a company.…

Q: Explain how the inventory valuation method (LIFO or FIFO) chosen by a company affects the cost of…

A: Inventory management refers to the valuation of inventory in three ways FIFO, LIFO and weighted…

Q: Which of the following may not result to the amount of cost of sales? a.Net purchases less net…

A: Solution- COGS can be calculated in three steps that culminate in one formula.   Or, to put it…

Q: In a period of rising prices,a. cost of goods sold under LIFO will be less than under FIFO.b. gross…

A:

Q: 1) If the ending inventory is to be valued at approximately lower-of-cost-or-net realizable value,…

A: Cost to retail ratio may be defined as the division of cost of goods available for sale and retail…

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 cost flow assumption would consistently result in the highest income in a period of…

A: Inventory valuation is done at the end of the accounting period and different inventory valuation…

Q: Which inventory costing method results in the lowest net income during a period of rising inventory…

A: In case of LIFO method, most of the cost of goods sold is calculated at the latest price since the…

Q: Which U.S. GAAP principle or rule would apply if the net realizable value of acompany’s inventory is…

A: Net realizable value: Net realizable value is the net amount of receivables which a business expects…

Q: n a period of rising prices, which method would yield the lowest ending inventory, highest net…

A: Inventory valuation refers to the methods used by the company to determine the value of its…

Q: Which cost flow assumption generally results in the highest reported amount for ending inventory…

A: First-in-First-Out method: In First-in-First-Out method, the costs of the initially purchased items…

Q: Inventory Costing Method.

A: Methods of issuing the Material from store: THE Material purchased at first entered into the store…

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: When inventory costs rise and inventory quantities are not decreasing, what does the LIFO produces?

A: Last-in-First-Out (LIFO): In this method, items purchased recently are sold first. So, the value of…

Q: What is the dollar-value method of LIFO inventory valuation?What advantage does the dollar-value…

A:

Q: When a company determines that the net realizable value of its ending inventory is lower than its…

A: Lower of cost and net realizable value: The lower of cost and net realizable value is a method which…

Q: Which cost flow assumption generally results in the highest reported amount of net income in periods…

A: Solution: Under FIFO method, inventory is valued at latest purchase cost. Therefore in period of…

Q: If ending inventory is overstated in the current fiscal year, what effect will this have on net…

A: The question is multiple choice question and related with overstated ending inventory. The ending…

Q: answer the following regarding inventories.   The inventory costing method which in a period of…

A: The correct Answer is Last-in, First-out (LIFO) Method

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.