Intermediate Accounting Chapter 8
A LIFO reserve is - ANS-a contra asset
\aussie Sue's inventory turnover ratio for 2000 is: - ANS-3.23
\Base Company adopted dollar-value LIFO (DVL) as of January 1, 2000 when it had an
inventory of $700,000. Its inventory as of December 31, 2000 was $725,000 at year-end prices
and the cost index was 1.05. What was DVL inventory on December 31, 2000 - ANS-690,476
\Blaine Corporation adopted dollar-value LIFO on January 1, 2000 when the inventory value
was $500,000 and the cost index was 1.0. On December 31, 2000, the inventory value at
year-end costs was $535,000 and the cost index was 1.06. Blaine would report a LIFO inventory
of: - ANS-505,000
\Company A is identical to Company B in every regard except that Company A uses FIFO and
Company B uses LIFO. In an extended period of rising prices, Company A's gross profit and
inventory turnover, compared to Company B's, would be: - ANS-gross profit = greater, inventory
turnover = lesser
\Company C is identical to Company D in every respect except that Company C uses LIFO and
Company D uses average costs. In an extended period of rising prices, Company C's gross
profit and inventory turnover, compared to Company D's, would be: - ANS-gross profit = lesser,
inventory turnover = greater
\Conceptually, the gross method views discounts not taken as - ANS-inventory cost
\Cost of goods sold is given by: - ANS-Net Purchases + beginning inventory - ending inventory.
\During periods when prices are rising and inventory quantities are stable, ending inventory will
be - ANS-greater under LIFO then FIFO
\Ending inventory is equal to the cost of items on hand plus: - ANS-Items in transit sold f.o.b.
destination.
\hat is Nu's net income if it elects FIFO - ANS-288
\If a company uses LIFO, a LIFO liquidation is problematic for a company's income taxes -
ANS-When inventory purchase costs are rising.
\In a period when prices are falling and inventory quantities are stable, the lowest taxable
income would be reported by using the inventory method of: - ANS-FIFO
\In a period when prices are rising and inventory quantities are stable, the inventory method that
would result in the highest ending inventory is: - ANS-FIFO
\In a PERIODIC inventory system, the cost of inventories sold is - ANS-Not recorded at the time
of sale
\In a perpetual average cost system: - ANS-A new weighted-average unit cost is calculated
each time additional units are purchased
\In a PERPETUAL inventory system, the cost of purchases is debited to - ANS-inventory
\In periods when prices are rising LIFO liquidations: - ANS-Distort the income statement
\Index Company adopted dollar-value LIFO (DVL) as of January 1, 2000 when it had a cost
inventory of $600,000. Its inventory as of December 31, 2000 was $680,000 at year-end prices
and the cost index was 1.08. What was DVL inventory on December 31, 2000 - ANS-632,000
\Inventory does not inculde - ANS-Equipment used in the manufacturing of assets for sale.
A LIFO reserve is - ANS-a contra asset
\aussie Sue's inventory turnover ratio for 2000 is: - ANS-3.23
\Base Company adopted dollar-value LIFO (DVL) as of January 1, 2000 when it had an
inventory of $700,000. Its inventory as of December 31, 2000 was $725,000 at year-end prices
and the cost index was 1.05. What was DVL inventory on December 31, 2000 - ANS-690,476
\Blaine Corporation adopted dollar-value LIFO on January 1, 2000 when the inventory value
was $500,000 and the cost index was 1.0. On December 31, 2000, the inventory value at
year-end costs was $535,000 and the cost index was 1.06. Blaine would report a LIFO inventory
of: - ANS-505,000
\Company A is identical to Company B in every regard except that Company A uses FIFO and
Company B uses LIFO. In an extended period of rising prices, Company A's gross profit and
inventory turnover, compared to Company B's, would be: - ANS-gross profit = greater, inventory
turnover = lesser
\Company C is identical to Company D in every respect except that Company C uses LIFO and
Company D uses average costs. In an extended period of rising prices, Company C's gross
profit and inventory turnover, compared to Company D's, would be: - ANS-gross profit = lesser,
inventory turnover = greater
\Conceptually, the gross method views discounts not taken as - ANS-inventory cost
\Cost of goods sold is given by: - ANS-Net Purchases + beginning inventory - ending inventory.
\During periods when prices are rising and inventory quantities are stable, ending inventory will
be - ANS-greater under LIFO then FIFO
\Ending inventory is equal to the cost of items on hand plus: - ANS-Items in transit sold f.o.b.
destination.
\hat is Nu's net income if it elects FIFO - ANS-288
\If a company uses LIFO, a LIFO liquidation is problematic for a company's income taxes -
ANS-When inventory purchase costs are rising.
\In a period when prices are falling and inventory quantities are stable, the lowest taxable
income would be reported by using the inventory method of: - ANS-FIFO
\In a period when prices are rising and inventory quantities are stable, the inventory method that
would result in the highest ending inventory is: - ANS-FIFO
\In a PERIODIC inventory system, the cost of inventories sold is - ANS-Not recorded at the time
of sale
\In a perpetual average cost system: - ANS-A new weighted-average unit cost is calculated
each time additional units are purchased
\In a PERPETUAL inventory system, the cost of purchases is debited to - ANS-inventory
\In periods when prices are rising LIFO liquidations: - ANS-Distort the income statement
\Index Company adopted dollar-value LIFO (DVL) as of January 1, 2000 when it had a cost
inventory of $600,000. Its inventory as of December 31, 2000 was $680,000 at year-end prices
and the cost index was 1.08. What was DVL inventory on December 31, 2000 - ANS-632,000
\Inventory does not inculde - ANS-Equipment used in the manufacturing of assets for sale.
