Zimt AG uses the FIFO method, and Nutmeg Inc. uses the LIFO method. Compared tothe cost of replacing the inventory, during periods of rising prices the ending inventorybalance reported by:A. Zimt is too high.B. Nutmeg is too low.C. Nutmeg is too high.

Q: The following information is for Lawrence Company, who uses the LIFO method: Item Cost NRV Minus…

A: ASU 2015-11 (topic 330) was issued by FASB to simplify the current application of ASC 330 (US GAAP)…

Q: AD, Inc. uses the LIFO-lower of cost or market method to value inventory. If the inventory value is…

A: For financial reporting purposes, will value the inventory in accounting at lower prices or on the…

Q: Ace Company is a retailer operating in an industry that experiences inflation (rising prices). Ace…

A: Companies using FIFO method for inventory valuation , reports higher inventory which generally leads…

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: The net realizable value of Lake Corporation’s inventory has declined below its cost. Allyn Conan,…

A:

Q: Identify the correct statement from the following if, cost of inventory is greater than its net…

A: Net realizable value seems to be an essential indicator being used in accounting reporting for…

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: Which one of the following inventories may not be valued for balance sheet purposes at the…

A: Inventory is valued only at lower of Cost or Net realizable value(which is the selling price minus…

Q: For all short exercises, assume the perpetual inventory system is used unless stated otherwise.…

A: Definition:

Q: Choose the statement which is correct. Assume that inventory prices are rising. Select one: a. The…

A: LIFO means last in first out where as FIFO means first in first out. Inventory and cost of goods…

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: The net realizable value of Lake Corporation’s inventory has declined below its cost. Allyn Conan,…

A: a. The ethical issue involved in the situation is, use of cost-of-goods-sold method to write down…

Q: Stiles Corporation uses the LIFO cost flow assumption and is in the process of applying the LCM rule…

A: LIFO: LIFO stands for Last-In, First-Out. In this method inventory purchased at last will be sell…

Q: Morgan Industries is comparing and contrasting its ending inventory value in terms of the three…

A: Answer : Option b. Weighted Average inventory cost method is correct answer.   Weighted Average cost…

Q: Hunter, Inc. uses the LIFO method of inventory costing and is facing the possibility of a LIFO…

A: Concept : It occurs when a company using LIFO inventory valuation method sells more goods old stock…

Q: Ross Electronics has one product in its ending inventory. Per unit data consist of the following:…

A: per unit of product in inventory = $20 Replacement cost = $18 Selling price = $30 Selling cost = $4…

Q: A company's inventory cost was lower in FIFO than it would have been using LIFO. Assuming no…

A: Inventory is the stock of goods with the company which is ready to sell out. It covers large…

Q: Under the lower of cost or market inventory valuation rule, market value of inventory is defined as:…

A: Market value is the price of an item/product prevailing in the market on the given date.

Q: Assuming that all net sales figures are at retail and all cost of goods sold figures are at cost,…

A: Inventories refer to the stock of goods that is held for the ultimate purpose of resale.

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: In which of the following scenarios does the basic Economic Order Quantity model can be applied? * O…

A: Lets understand the basics. Economic order quantity(EOQ) is a quantity at which ordering cost and…

Q: Application of the lower-of-cost-or-market rule results in inconsistency because a company may value…

A: Lower of Cost or market rule states that while estimating value of the company's Inventory it is…

Q: FAST PLZ - Which of the following element of cost is important in calculating the cost of closing…

A: Cost of goods sold means the cost incurred on the manufacturing or purchase of goods which has been…

Q: For all short exercises, assume the perpetual inventory system is used unless stated otherwise.…

A: Inventory Costing Method:   Under inventory costing method, the flow of cost of inventory is…

Q: Smmons Inc. uses the lower of cost on meket method to valesinventory that is accounted or using he…

A: Inventory valuation method includes: First-in, First-Out (FIFO) Last-in, Last-Out (LIFO) Average…

Q: 1.Given a particular set of factsand assumptions, the following pairs of amounts were computed using…

A: LIFO = Last in, First out FIFO = First in, First out A) $20,650 =FIFO$19,400 = LIFO B) $10,650 =…

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: During a period of falling prices, which of the following inventory methods generally results in the…

A: There are 3 types of methods for inventory valuation: a.FIFO b. LIFO c. Weighted average FIFO: In…

Q: Ross Electronics has one product in its ending inventory. Per unit data consist of the following:…

A: Net realizable value=Selling Price-Selling cost=$34-$5=$29

Q: the ending inventory of a firm is overstated by $49,000, by how much and in what direction…

A: Solution Concept Mathematically Cost of goods sold       =beginning inventory + purchase – ending…

Q: Which of the following is the advantage of using weighted average inventory valuation? When prices…

A: Under FIFO, beginning purchases constitutes the cost of goods sold and ending purchases are the…

Q: Ward Hardware does not expect costs to change dramatically and wants to use an inventory costing…

A: Perpetual Inventory System is an accounting system of valuing the inventory where there is a need…

Q: EFG Co. has 600 units in inventory that had been purchased for $22 each and that would currently…

A: Solution: Cost per unit of inventory = $22 Market price = $28.50 per unit According to accounting…

Q: Stiles Corporation uses the FIFO cost flow assumption and is in the process of applying the LCNRV…

A: LCNRV Means lower of cost or net realisable value method where cost means historical cost and net…

Q: The management of Aspen company believes that under the lower of cost or market rule, the 2 items…

A: a.   Merchandise inventory to be shown at cost or market price(NRV) which ever is lower .…

Q: During a period when inventory costs are steadily increasing, which of the following is true? O a.…

A: FIFO considers the cost of initial purchases as the cost of goods sold and the later purchases as…

Q: Inventory Costing Method.

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

Q: Management of Tarry Company takes the position that under the lower-of-cost-or-market rule, the two…

A: In the lower of cost or market (LCM) inventory valuation method, the inventory of the company…

Q: A business uses a perpetual inventory system. During periods of rising prices, cost of goods sold…

A: In FIFO the earliest  goods ( beginning) will be sold first.

Q: On the basis of the following data, determine the value of the inventory at the lower of cost or…

A: Lower-of-cost-or-market value: The lower-of-cost-or-market value is a method which requires the…

Q: Assume that the ending inventory of a merchandising firm is overstated by $40,000. a. By how much…

A: The cost of goods sold formula is calculated by adding purchases for the period to the beginning…

Q: Which one of the following is a reason for the just- in-time inventory policy? Select one: A. The…

A: Just in time inventory policy means purchasing the inventory when ever required and not maintaining…

Q: In order to get the lowest profits possible in periods of rising inventory costs, the company should…

A: Inventory costing is an accounting concept that has direct consequence on company’s gross profit and…

Q: 2. Shepherd Cycles does not expect prices to change dramatically and wants to use a method that…

A: An inventory valuation allows a business to assign a monetary value to items in its inventory.…

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.