5) Venus Company started operations in 2020, and initially the FIFO method was used to value...

Transcribed Image Text:

5) Venus Company started operations in 2020, and initially the FIFO method was used to value the inventory. Beginning of 2022, the company decided to change the method of inventory valuation from FIFO to Weighted Average. The pre-tax income data for 2020 and 2021 is as follows. Weighted Average $295,000 2021 $375,000 $380,000 What will be the cumulative effect of change in accounting principle from FIFO to Weighted Average? (Assume 30% tax rate) A) $20,000. B) $17,500. C) $25,000. D) $10,500. Year 2020 FIFO $275,000 6) The measurement principle includes the: A) Fair value principle only. B) Historical cost principle only. C) Historical cost principle and fair value principle. D) Revenue recognition principle and expense recognition principle. 5) Venus Company started operations in 2020, and initially the FIFO method was used to value the inventory. Beginning of 2022, the company decided to change the method of inventory valuation from FIFO to Weighted Average. The pre-tax income data for 2020 and 2021 is as follows. Weighted Average $295,000 2021 $375,000 $380,000 What will be the cumulative effect of change in accounting principle from FIFO to Weighted Average? (Assume 30% tax rate) A) $20,000. B) $17,500. C) $25,000. D) $10,500. Year 2020 FIFO $275,000 6) The measurement principle includes the: A) Fair value principle only. B) Historical cost principle only. C) Historical cost principle and fair value principle. D) Revenue recognition principle and expense recognition principle.

Answer rating: 100% (QA)

question 6 measurement principles includes the historical cost prin... View the full answer