Why does reporting income under generally accepted accounting principles “reward building inventory and “penalize” reducing

Q: 1. On which of the following instances is cost estimation not permitted? A. Estimating the cost of…

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

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: Current Attempt in Progress If a company overstates its closing inventory, it will O understate…

A: When closing inventory is overstated, this reduces the amount of inventory that would otherwise have…

Q: What is the effect on net income if a company failed ro record a purchase in transit (FOB shipping…

A: Purchase in transit (FOB shipping point) means that where buyer become the owner of the goods at the…

Q: Generally accepted accounting principles require that the inventory of a company be reported at:…

A: The inventory can be reported at various values as historical cost, market value, net realisable…

Q: Changing the method of inventory valuation should be reported in the financial statements under what…

A: Inventory- A manufacturing company's inventory is a critical current asset. Inventory refers to the…

Q: In what ways would a reduction in inventory help the company

A: Inventory refers to all the items, goods, merchandise, and materials held by a business for selling…

Q: Which of the following is not permitted as a cost of inventory?

A: Which of the following is not permitted as a cost of inventory? Answer - b) Storage costs

Q: Which of the following is not a disadvantage of the LIFO inventory cost flow assumption? a. The…

A: LIFO is the Last in first out method of inventory which says that inventory purchased last should be…

Q: Which of the following statements is incorrect? Group of answer choices A)Ending inventory exceeds…

A: a) Cost of goods sold= Opening inventory + Purchases - Ending inventory Lets take a example…

Q: The cost of purchase of inventory does not include: A. Freight handling and other cost directly…

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

Q: How much should be reported as loss from inventory write-down?

A: New Unit Cost to Sale = Unit Selling price updated - Unit Cost The difference in Profit per Unit =…

Q: What is inventory shrinkage? What are some of the reasons for inventory shrinkage?

A: Inventory Shrinkage :  As the name suggests, it is considered as shrinking or shortening of…

Q: Why would a company choose to use an inventory costing method that estimates the cost of the goods…

A: In this question, we  explain that why would a company choose to use an inventory costing method…

Q: Which of the following is true about the issues of the gross profit method of estimating inventory?…

A: The gross profit method is a method for estimating the value of ending inventory and cost of…

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: What is the effect on net income if a company fails to record a purchase in transit (FOB shipping…

A: Accounting for inventory Inventory is all type of goods and products held by the seller to sell in…

Q: 2. When Inventory is sold, how is the cost of goods sold account affected? Briefly explain

A: Inventory is an asset which is recorded in the balance sheet . It is the merchandise owned by the…

Q: Suppose Ajax Corporation overstates its ending inventory amount. What effect will this have on the…

A: Given information is: Ajax Corporation overstates its ending inventory amount.

Q: Which of the following statement is not valid as it applies to inventory costing method?  A) If…

A: The correct answer is Option (d)

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: How does the inventory method chosen can have a significant effect on the amount of income reported…

A: Inventory is an important asset for the business. And its accounting has two methods of inventory…

Q: An overstatement of ending inventory results in: Select one: a. an understatement of COGS and an…

A: option a is the correct answer.

Q: TRUE OR FALSE? The increase in the provision for inventory obsolescence is treated as a change in…

A: Accounting policies are the set of principles to be followed in the preparation of financial…

Q: Rustic Company has recognized an impairment loss on the value of inventory. If the inventory's value…

A: there is difference in the requirement of and recording of inventory as per ifrs and US GAAP . gaap…

Q: 55. Why is inventory, end is included in the computation of net income? * O A. To determine cost of…

A: Solution: Cost of goods sold = Beginning inventory + Purchases - Ending inventory Inventory, end is…

Q: How should accounting be able to catch up with the high sales return rates, particularly on…

A: Inventory management: Inventory management can be defined as a system to measure and record the…

Q: Which of the following items in the balance sheet does NOT have a constant relationship with sales…

A: In the percentage of sales method, we forecast line items for the future by using the historical %…

Q: When a company uses LIFO for external reporting purposes FIFO for internal reporting pusposes, an…

A: LIFO reserve: LIFO reserve refers to the difference in the value of inventory, between the goods…

Q: Allowance Method in accounting for inventory write-down

A: Statement I is correct because Allowance method is required to be followed in accounting for…

Q: 1. What is the effect on net income if a company fails to record a purchase in transit (FOB shipping…

A: Net income refers to the income which is calculated by deducting cost of goods sold, expenses,…

Q: i) Explain the main causes of inventory decreasing and increasing. (ii) What is the accounting…

A: Hello. Since your question has multiple parts, we will solve the first question for you. If you want…

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: a. Income manipulation is difficult under LIFO. b. Accounting principles do not require that the…

A: The right answer is option b. Accounting principles do not require that the inventory cost flow…