Financial Accounting - Access
4th Edition
ISBN: 9781259958533
Author: SPICELAND
Publisher: MCG
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Chapter 6, Problem 6.9BE
Identify financial statement effects of FIFO and LIFO (LO6–4)
For each item below, indicate whether FIFO or LIFO will generally result in a higher reported amount when inventory costs are rising versus falling. The first answer is provided as an example.
| Inventory Costs | Higher Total Assets | Higher Cost of Goods Sold | Higher Net Income |
| Rising | FIFO | ||
| Declining |
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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
H7.
For the same transactions, why does the weighted-average cost method provide different value for ending inventory and COGS depending on whether the periodic or perpetual inventory system is used?
Select one: a. Perpetual inventory calculates and assigns costs as items are sold, while periodic inventory calculates and assigns costs at the end of the period.
b. Perpetual inventory calculates and assigns costs at the end of the period, while periodic inventory calculates and assigns costs as items are sold.
c. Perpetual inventory counts all the purchases for the month first before calculating the average cost, while periodic calculates the average cost after every transaction.
d. Perpetual inventory and periodic inventory will not provide different values using
Explain also wrong options and explain with details
1. U.S. public companies using LIFO also report the amount that inventory wouldincrease (oroccasionally decrease) if the company had instead used FIFO.
See file please.
Chapter 6 Solutions
Financial Accounting - Access
Ch. 6 - 1.What is inventory? Where in the financial...Ch. 6 - Prob. 2RQCh. 6 - What is the difference among raw materials...Ch. 6 - Prob. 4RQCh. 6 - Prob. 5RQCh. 6 - What is a multiple-step income statement? What...Ch. 6 - Cheryl believes that companies report cost of...Ch. 6 - What are the three primary cost flow assumptions?...Ch. 6 - 9.Which cost flow assumption generally results in...Ch. 6 - Prob. 10RQ
Ch. 6 - Prob. 11RQCh. 6 - 12.Explain how LIFO generally results in lower...Ch. 6 - Prob. 13RQCh. 6 - Explain how freight charges, purchase returns, and...Ch. 6 - Explain the method of reporting inventory at lower...Ch. 6 - 16.How is cost of inventory determined? How is net...Ch. 6 - 17.Describe the entry to adjust from cost to net...Ch. 6 - Prob. 18RQCh. 6 - Prob. 19RQCh. 6 - How is gross profit calculated? What is the gross...Ch. 6 - 21.Explain how the sale of inventory on account is...Ch. 6 - Prob. 22RQCh. 6 - Prob. 23RQCh. 6 - Prob. 24RQCh. 6 - Understand terms related to types of companies...Ch. 6 - Prob. 6.2BECh. 6 - Calculate cost of goods sold (LO62) At the...Ch. 6 - Prob. 6.4BECh. 6 - Calculate ending inventory and cost of goods sold...Ch. 6 - Calculate ending inventory and cost of goods sold...Ch. 6 - Calculate ending inventory and cost of goods sold...Ch. 6 - Prob. 6.8BECh. 6 - Identify financial statement effects of FIFO and...Ch. 6 - Prob. 6.10BECh. 6 - Record freight charges for inventory using a...Ch. 6 - Record purchase returns of inventory using a...Ch. 6 - Prob. 6.13BECh. 6 - Prob. 6.14BECh. 6 - Prob. 6.15BECh. 6 - Prob. 6.16BECh. 6 - Prob. 6.17BECh. 6 - Prob. 6.18BECh. 6 - Record purchase returns of inventory using a...Ch. 6 - Refer to the information in BE613, but now assume...Ch. 6 - Prob. 6.21BECh. 6 - Prob. 6.22BECh. 6 - Calculate cost of goods sold (LO62) Russell Retail...Ch. 6 - Prob. 6.2ECh. 6 - Prob. 6.3ECh. 6 - Calculate inventory amounts when costs are rising...Ch. 6 - Calculate inventory amounts when costs are...Ch. 6 - Record Inventory transactions using o perpetual...Ch. 6 - Record inventory purchase and purchase return...Ch. 6 - Prob. 6.8ECh. 6 - Prob. 6.9ECh. 6 - Prob. 6.10ECh. 6 - Record transactions using a perpetual system...Ch. 6 - Record transactions using a perpetual system...Ch. 6 - Calculate inventory using lower of cost and net...Ch. 6 - Prob. 6.14ECh. 6 - Calculate cost of goods sold, the inventory...Ch. 6 - Prob. 6.16ECh. 6 - Prob. 6.17ECh. 6 - Prob. 6.18ECh. 6 - Record inventory purchases and sales using a...Ch. 6 - Mulligan Corporation purchases inventory on...Ch. 6 - Complete the accounting cycle using Inventory...Ch. 6 - Calculate ending inventory and cost of goods sold...Ch. 6 - Prob. 6.2APCh. 6 - Prob. 6.3APCh. 6 - Prob. 6.4APCh. 6 - Calculate ending inventory end cost of goods sold...Ch. 6 - Record transactions using a perpetual system,...Ch. 6 - Prob. 6.7APCh. 6 - Prob. 6.8APCh. 6 - Record transactions and prepare a partial income...Ch. 6 - Prob. 6.10APCh. 6 - Calculate ending inventory and cost of goods sold...Ch. 6 - Prob. 6.2BPCh. 6 - Prob. 6.3BPCh. 6 - Prob. 6.4BPCh. 6 - Prob. 6.5BPCh. 6 - Record transactions using a perpetual system,...Ch. 6 - Prob. 6.7BPCh. 6 - Use the inventory turnover retio end gross profit...Ch. 6 - Record transactions and prepare a partial income...Ch. 6 - Determine the effects of inventory errors using...Ch. 6 - Great Adventures (This is a continuation of the...Ch. 6 - Prob. 6.2APFACh. 6 - Prob. 6.3APFACh. 6 - Comparative Analysis American Eagle Outfitters,...Ch. 6 - Prob. 6.5APECh. 6 - Prob. 6.6APIRCh. 6 - Written Communication You have just been hired as...Ch. 6 - Prob. 6.8APEM
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- Using the following data, how should the inventory be valued under lower of cost or market? Original cost 1,350 Estimated selling price 1,475 Selling expenses 180arrow_forwardUsing the following data, how should the inventory be valued under lower of cost or market? Original cost 1,350 Estimated selling price 1,475 Selling expenses 180arrow_forwardWhen 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. neverarrow_forward
- 1.Which of the following may not result to the amount of cost of sales? a.Net purchases less net increase in inventory b.Net decrease in inventory plus net purchases c.Total goods available for sale less beginning inventory d.Total goods available for sale less ending inventoryarrow_forward2. Which of the following may not result to the amount of cost of sales? a. Net purchases less net increase in inventory. b. Net decrease in inventory plus net purchases. c. Total goods available for sale less beginning inventory. d. Total goods available for sale less ending inventory. 3. Which of the following is equal to the cost of goods sold? a. net purchases plus the excess of ending inventory over beginning inventory. b. total goods available for sale plus ending inventory. c. net purchases minus the increase in inventory. d. net purchases minus the decrease in inventory.arrow_forward3. Which of the following is equal to the cost of goods sold? a. net purchases plus the excess of ending inventory over beginning inventory. b. total goods available for sale plus ending inventory. c. net purchases minus the increase in inventory. d. net purchases minus the decrease in inventory.arrow_forward
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