Explain how the statement of financial position and statement of income would compare if a company used FIFO instead of weighted-average when the prices of inventory were rising. How would this change if the prices of inventory were decreasing?
Answer to relevant QuestionsDescribe how the lower of cost and net realizable value is applied to inventory. Explain why this is done. Explain what basic assumption is implicit in the gross margin inventory estimation method. Why would this assumption be a challenge to defend for many companies? Identify steps a company could take to overcome this challenge ...Explain the basic differences between periodic and perpetual inventory systems. If your instructor has assigned the Appendix to this chapter, redo Problem AP7-1 assuming that the company uses the periodic inventory system. In Problem AP7-1 The Soft Touch Company sells leather furniture. The following ...An assignment in your accounting course requires that you prepare an analysis of two retail companies. Required: Which ratios would you find useful in analyzing inventory? Explain why the ratios are useful.
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