Zimt AG uses the FIFO method, and Nutmeg Inc. uses the LIFO method. Compared tothe cost of replacing the inventory, during periods of rising prices the ending inventorybalance reported by:A. Zimt is too high.B. Nutmeg is too low.C. Nutmeg is too high.

Zimt AG uses the FIFO method, and Nutmeg Inc. uses the LIFO method. Compared tothe cost of replacing the inventory, during periods of rising prices the ending inventorybalance reported by:A. Zimt is too high.B. Nutmeg is too low.C. Nutmeg is too high.

Name: Zimt AG uses the FIFO method, and Nutmeg Inc. uses the LIFO method. Co
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Description: Zimt AG uses the FIFO method, and Nutmeg Inc. uses the LIFO method. Compared tothe cost of replacing the inventory, during periods of rising prices the ending inventorybalance reported by:A. Zimt is too high.B. Nutmeg is too low.C. Nutmeg is too high

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

Chapter9: Working Capital

Section: Chapter Questions

Problem 7Q

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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
In rimes of rising prices, the inventory cost method that will yield the highest cost of goods sold is (a) LIFO. (b) weighted-average. (c) FIFO. (d) none of the above.
During periods of declining prices, when comparing LIFO and FIFO inventory methods: A. LIFO inventory and cost of goods sold would be higher than FIFO B. LIFO inventory and cost of goods sold would be lower than FIFO. C. LIFO inventory would be lower and cost of goods sold would be higher than FIFO. D. LIFO inventory would be higher and cost of goods sold would be lower than FIFO.
Choose the statement which is correct. Assume that inventory prices are rising. Select one: a. The FIFO method gives the lowest closing inventory figure in the balance sheet. b. The FIFO method gives the highest closing inventory figure in the balance sheet. c. The LIFO method gives the lowest figure for cost of sales. d. The LIFO method gives the highest closing inventory figure in the balance sheet. e. None of the above answers is correct.
During a period of falling prices, which of the following inventory methods generally results in the lowest balance sheet amount for inventory? Da. FIFO method b. LIFO method c. average cost method d. Cannot tell without more information.
Ace Company is a retailer operating in an industry that experiences inflation (rising prices). Ace wants to maintain a high current ratio. Which inventory costing method should Ace consider using? Average O LIFO O No inventory costing method directly affects the current ratio O FIFO
Which of the following statements regarding the lower of cost and net realizable value (LCNRV) rule is true? a.The LCNRV rule is an application of the cost principle. b.When the net realizable value of inventory drops below the cost of inventory, an adjustment is made to decrease inventory to its net realizable value and decrease income. c.If a company uses the LCNRV rule, there is no need to use a cost flow assumption such as FIFO, or weighted average cost. d.When the net realizable value of inventory is above the cost of inventory, an adjustment is made to increase inventory to its net realizable value and increase income.
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
Under the LIFO cost flow assumption during a period ofinflation, which of the following is false? A. Cost of goods sold will be lower than under FIFO B. Gross margin will be lower than under FIFO C. Income tax expense will be lower than under FIFO D. Ending inventory will be lower than under FIFO
In a period of rising prices,a. cost of goods sold under LIFO will be less than under FIFO.b. gross profit under FIFO will be higher than under LIFO.c. LIFO inventory will be greater than FIFO inventory.d. net income under LIFO will be higher than under FIFO.
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
Which of the following is true regarding LIFO and FIFO? A) In a period of decreasing costs, LIFO results in lower total assets than FIFO. B) In a period of decreasing costs, LIFO results in lower net income than FIFO. C) In a period of rising costs, LIFO results in lower net income than FIFO. D) The amount reported for COGS is based on net realizable value of inventory if LIFO is used. E) None of the Above