2. Shepherd Cycles does not expect prices to change dramatically and wantsto use a method that averages price changes.B. Which inventory method would best meet Shepherd's goal?Enter answer here.C. What if Shepherd wanted to expense out the newer purchases of goodsinstead? Which inventory would best meet that need?Enter answer here.

An inventory valuation allows a business to assign a monetary value to items in its inventory.…

Answered: 2. Shepherd Cycles does not expect…

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter10: Inventory

Section: Chapter Questions

Problem 6MC: When would using the FIFO inventory costing method produce higher inventory account balances than...

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Ward Hardware does not expect costs to change dramatically and wants to use an inventory costing method that averages cost changes. Requirements 1. Which inventory costing method would best meet Ward's goal? 2. Assume Ward wanted to expense out the newer purchases of goods instead. Which inventory costing method would best meet that need? Requirement 1. The inventory costing method that averages cost changes is the: O A. Last-in, first-out (LIFO) cost method O B. Weighted-average method OC. First-in, first-out (FIFO) cost method O D. Specific identification method Requirement 2. The inventory costing method that expenses out the newer purchases of goods is the: O A. Last-in, first-out (LIFO) cost method B. Weighted-average method Oc. Specific identification method O D. First-in, first-out (FIFO) cost method
If costs are declining, will the LIFO or FIFO method of inventory valuation yield the lower cost of goods sold? Why?
If costs are rising, which of the following will be true?a. The cost of goods sold will be greater if LIFO is usedrather than weighted average.b. The cost of ending inventory will be greater if FIFO isused rather than LIFO.c. The gross profit will be greater if FIFO is used ratherthan LIFO.d. All of the above are true
Why are perpetual inventory systems more expensive to operate than periodic inventory systems? What conditions justify the additional cost of a perpetual inventory system?
How would reported income differ if LIFO rather than FIFO were used when purchase prices are rising? When purchase prices are falling?
When would using the FIFO inventory costing method produce higher inventory account balances than the LIFO method would? A. inflationary times B. deflationary times C. always D. never
The managers of a profit-seeking organisation would always hope that the net realisable value of inventory would ______ cost. Select one alternative: be above match the remain below be included in the
Are you correct that, by using LIFO, Kroger reports lower inventory and lowerprofits? Why would Kroger do that?
For all short exercises, assume the perpetual inventory system is used unless stated otherwise. Determining inventory costing methods Ward Hardware does not expect costs to change dramatically and wants to use an inventory costing method that averages cost changes. Requirements Which inventory costing method would best meet Ward’s goal? Assume Ward wanted to expense out the newer purchases of goods instead. Which inventory costing method would best meet that need?
What is the dollar-value method of LIFO inventory valuation?What advantage does the dollar-value methodhave over the specific goods approach of LIFO inventoryvaluation? Why will the traditional LIFO inventory costingmethod and the dollar-value LIFO inventory costingmethod produce different inventory valuations if thecomposition of the inventory base changes?
Assuming rising inventory prices, which statement is correct? Group of answer choices A. FIFO reports a lower value for cost of sales than other methods B. FIFO reports a lower value for closing inventory than other methods C. Using FIFO, it is not possible to calculate whether cost of sales/inventory is lower or higher than it would be if other assumptions about inventory valuation were made D. FIFO reports a lower profit than other methods
Which one of the following statements is true? a. Under conditions of rising prices, the LIFO method results in lower income than the FIFO method. b. In most cases, the LIFO method approximates the physical flow of items in inventory. c. The LIFO mthod produces a higher ending inventory value than the FIFO method. d. The FIFO method excludes holding gains from income

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