BuyFindarrow_forward

College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756

Solutions

Chapter
Section
BuyFindarrow_forward

College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756
Textbook Problem

In a period of rising prices, which inventory method will result in:

  1. (a) the highest cost of goods sold?
  2. (b) the lowest cost of goods sold?
  3. (c) the highest ending inventory?
  4. (d) the lowest ending inventory?
  5. (e) the highest gross profit?
  6. (f) the lowest gross profit?

To determine

Indicate which inventory method will result the followings during a period of rising prices:

  1. (a) Highest cost of goods sold,
  2. (b) Lowest cost of goods sold,
  3. (c) highest ending inventory,
  4. (d) Lowest ending inventory,
  5. (e) Highest gross profit and
  6. (f) Lowest gross profit.
Explanation

Inventory costing methods: The costing method that is used to record the cost of goods sold and ending inventory in the financial statements is referred to as inventory costing method.

First-in First-Out method (FIFO): Under FIFO method, the cost of first acquired items is assigned to sales first. The value of the closing stock includes the cost of recently acquired items.

Last-In First-Out method (LIFO): Under LIFO methods, the cost of the items, which are purchased last, are assigned to sales first. The value of the closing stock includes the cost of first acquired items

Indicate which inventory method will result the followings during a period of rising prices:

SectionDetailsJustification
(a)The highest cost of goods sold

In case of rising prices, the LIFO method produces the highest cost of goods sold...

Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

Additional Business Solutions

Find more solutions based on key concepts

Show solutions add

What are the two main causes of market failure? Give an example of each.

Principles of Microeconomics (MindTap Course List)

What are the major components of a marketing strategy?

Foundations of Business (MindTap Course List)

Why are accruals called spontaneous sources of funds, what are their costs, and why dont firms use more of them...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)