(a) Compare the financial effects (ignore income tax) of using the FIFO and average inventory cost formulas...

Question:

(a) Compare the financial effects (ignore income tax) of using the FIFO and average inventory cost formulas during a period of declining prices on

(1) Cash,

(2) Ending inventory,

(3) Cost of goods sold,

(4) Net income, and

(5) Retained earnings.

(b) Would your answers change if prices were rising rather than declining? Explain.

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For book-img-for-question

Financial Accounting Tools For Business Decision Making

ISBN: 9781119594574

8th Canadian Edition

Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso, Barbara Trenholm, Wayne Irvine, Christopher D. Burnley

See More Books

Question Posted: Mar 03, 2023 11:58 PM

See More Questions

Compare the financial effects (ignore income tax) of using the FIFO and average inventory cost methods during a period of declining prices on (a) Cash (pre-tax), (b) Ending inventory , (c) Cost of...
In the preceding problem, how would your answers change if Amy instead files her return on June 18 and, on September 8 pays the amount due? Assume her wage withholding tax amounts to a. $19,000 b....
Refer to Problem 14-39. How would your answers change if the trust were a discretionary trust that distributes $12,000 to its beneficiary, Julio? In problem Dividends .$15,000 Interest on tax-exempt...
Table 2-5 Estonia Finland One Cell Phone 40 hours 16 hours Lumber (per board foot) 8 hours 4 hours Table 2-5 shows the number of labor hours required to produce a cell phone and a board foot of...
Suppose that $1 billion of pass-throughs is used to create a CMO structure with a PAC bond with a par value of $700 million (PAC I), a support bond with a schedule (PAC II) with a par value of $100...
A Martian leaves Mars in a spaceship that is heading to Venus. On the way, the spaceship passes earth with a speed v = 0.80c relative to it. Assume that the three planets do not move relative to each...
The rigid bar is supported by the pin-connected rod CB that has a cross-sectional area of 500 mm2 and is made of A-36 steel. Determine the vertical displacement of the bar at B when the load is...
Assume that r2 equals .50 for the relationship between height and weight for adults. Indicate whether the following statements are true or false. (a) Fifty percent of the variability in heights can...
Mid-South Auto Leasing leases vehicles to consumers. The attraction to customers is that the company can offer competitive prices due to volume buying. On September 30, 2024, the company leased a...
While James Craig and his former classmate Paul Dolittle both studied accounting at school, they ended up pursuing careers in professional cake decorating. Their company, Good to Eat (GTE),...
Which inventory cost formulaFIFO or average cost provides the better measure of cost of goods sold on the statement of income and which provides a better measure of ending inventory on the statement...
If an error in counting ending inventory in one year will have the reverse effect in the following year, do we need to correct this error when we discover it? Explain.
What do YOU regard as the most potential risks to the respect for, and safeguarding of, human rights by business organisations?
The following information pertains to the Yellow Dog Corporation: Total Units for information given Fixed Cost per Unit Selling Price per Unit Variable Costs per Unit Target Operating Income 7,000...
The Rock Company produces basketballs It incurred the following costs during the year. Direct materials $16,416 Direct labor $29,184 Fixed manufacturing overhead $13,680 Variable manufacturing...
Brandeis, Inc has a 45-day accounts payable period. The firm has expected quarterly sales of $2,400, $2,800, $3,600, and $4,200, respectively, for the next calendar year. The cost of goods sold for a...
Interest During Construction Matrix Inc. borrowed $1,100,000 at 8% to finance the construction of a new building for its own use. Construction began on January 1, 2019, and was completed on October...
solve by LCM Method:+ DIT x-1 x-3
Julie transferred a personal-use computer to her sole proprietorship. The computer originally cost her $3,000. At the date of transfer, the computer had a fair market value of $1,000. Explain how...
Refer to the data in QS 10-1. Based on financial considerations alone, should Helix accept this order at the special price? Explain.
Selected financial data for Stanley Black & Decker, Inc. and Snap-On Tools for 2009 are presented here (in millions). Instructions(a) For each company, compute the following ratios.(1) Current...
Your parents are considering investing in Tootsie Roll Industries common stock. They ask you, as an accounting expert, to make an analysis of the company for them. Fortunately, excerpts from a recent...
The financial statements of The Hershey Company are presented in Appendix B, following the financial statements for Tootsie Roll Industries in Appendix A. Instructions (a) Based on the information in...
When their grand daughter was born, the Lee's decided to set up a trust fund for her which earns 4.00% compounded monthly . They started by depositing $100 exactly one month after their granddaughter...
2. When mixed, the primary colors - red, blue, and yellow-create secondary colors-orange, green, and purple. Mix red and blue to get purple Mix blue and yellow to get green Mix yellow and red to get...
Assume the following data for a stock: risk-free rate = 5 percent; beta (market) = 0.75; beta (size) = 0.5; beta (book-to-market) = 1.5; market risk premium = 7 percent; size risk premium = 5...

(a) Compare the financial effects (ignore income tax) of using the FIFO and average inventory cost formulas...

Question:

Step by Step Answer:

a 1 No effect cash is not affected by the choice of inventory cost formulas 2 In a period of declini...View the full answer

Financial Accounting Tools For Business Decision Making

Students also viewed these Business questions