Question: Assuming rising prices, which method will give the highest dollar value for cost of goods sold on the income statement? Select one: A. FIFO B.

Assuming rising prices, which method will give the highest dollar value for cost of goods sold on the income statement?

Select one:

A. FIFO

B. Average Cost

C. LIFO (not correct)

D. All of these give equal values for cost of goods sold

Which expense recognition system is used to recognize cost of goods sold?

Select one:

A. Direct association

B. Systematic allocation

C. Immediate recognition

D. Reserve association (not correct)

Under which method of inventory cost flows is the cost flow assumed to be in the reverse order in which the expenditures were made?

Select one:

A. Lower of cost or market

B. Average cost

C. First-in, first-out (not correct)

D. Last-in, first-out

Which of the following is not a reason that so much attention paid to inventory in financial statement analysis?

Select one:

A. Low inventories may result in substantial costs for the company

B. Risks of inventory losses are often high

C. It can provide insight into future performance

D. The magnitude of a company's inventory investment is often very large (not correct)

The following data refer to Spicer Company's ending inventory:

Item Code	Quantity	Unit Cost	Unit NRV
Small	50	130	128
Medium	75	185	187
Large	60	160	168
Extra-Large	30	200	193

How much is ending inventory if the lower of cost or net realizable value rule is applied to the total inventory?

Select one:

A. $36,605

B. $35,665 (not correct)

C. $35,975

D. $36,295 (not correct)

If inventory at the end of the year is understated by $60,000, what will this error cause?

Select one:

A. An understatement of cost of goods sold for the year by $60,000 (not correct)

B. An overstatement of gross profit for the year by $60,000

C. An understatement of net income for the year by $60,000

D. An overstatement of inventory for the year by $60,000

Wooster Company imports and sells a product produced in Canada. In the summer of 2021, a natural disaster disrupted production, affecting its supply of product. On January 1, 2021, Wooster's inventory records were as follows:

Year purchased	Quantity (units)	Cost per unit	Total cost
2019	5,000	$150	$750,000
2020	10,000	$200	2,000,000
Total	15,000		$2,750,000

Through the mid-December of 2021, purchases were limited to 14,000 units, because the cost had increased to $300 per unit. Wooster sold 18,000 units during 2021 at a price of $400 per unit, which significantly depleted its inventory.

Assume that Wooster purchases 20,000 more of the $300 units on December 31, 2021. Wooster uses the FIFO inventory method.

Wooster's gross profit for 2021.

Select one:

A. $1,800,000

B. $3,600,000

C. $2,200,000 (not correct)

D. $3,550,000

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Accounting Questions!

Assuming rising prices, which method will give the highest dollar value for cost of goods sold on the income statement ?

During its first year of operations, Richmond Company, using a periodic inventory system, made undiscovered errors in taking its year end inventory that overstated Year 1 ending inventory by...

21. Which of the following is a characteristic of a liability? a. It creates a present obligation for future payment of cash or services. b. It cannot be settled with services. c. It is an avoidable...

accouting question The following data refer to Jacket Company's ending Inventory: Item code Quantity Unit Cost Unit Market Small 100 $114 $116 Medium 420 76 88 Large 600 84 88 Extra-Large 220 134 128...

Assuming rising prices, which method will give the highest dollar value for cost of goods sold on the income statement? Select one: A . FIFO B . Average Cost C . LIFO D . All of these give equal...

Assuming rising prices, which method will give the highest dollar value for cost of goods sold on the income statement? FIFO Average Cost LIFO All of these gives equal value for cost of goods sold...

7. Assuming rising prices, which method will give the highest dollar value for cost of goods sold on the income statement? (3 points) a. FIFO b. Average Cost C. LIFO d. All of these give equal values...

Assuming falling prices, which method will give the highest dollar value for cost of goods sold on the income statement? LIFO FIFO Average Cost All them give equal values for cost of goods sold BBC...

Assuming rising prices, which method will give the highest dollar value for cost of goods sold on the income statement?Group of answer choicesAll methods give equal values for cost of goods...

State the objective of the Single Audit Act. When is this act applicable?

The company founder hires us as consultants and asks that we oversee the accounting for new equipment purchased on January 1. The founder wants to know the implications of different depreciation...

Question 1 1 ( 1 point ) Saved In even - numbered years, Texas representatives receive a salary of q , per year, not including a per diem. a ) $ 2 8 , 2 0 0 b ) $ 1 2 , 0 0 0 c ) $ 7 , 2 0 0 d ) $ 0

Lemon Auto Wholesalers had sales of $1,630,000 last year, and cost of goods sold represented 70 percent of sales. Selling and administrative expenses were 13 percent of sales. Depreciation expense...