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Name: For each item below, indicate whether FIFO or LIFO will generally resu
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Description: For each item below, indicate whether FIFO or LIFO will generally result in a higher reported amount when inventory costs are rising versus falling. The first answer is provided as an example. HigherTotal AssetsHigher CostHigherInventory Costsof Good

Business

Accounting

Higher Total Assets Higher Cost Higher Inventory Costs of Goods Sold Net Income Rising Declining FIFO

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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During the period of increasing prices, i. Net income under FIFO COGS under LIFO iii. Ending Inventory in LIFO > FIFO ending inventory iv. None is correct
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
If prices are rising, which inventory cost flow method will produce the lowest amount of cost of goods sold? Multiple Choice Weighted average. LIFO, FIFO, and the weighted-average inventory cost flow methods will all produce equal amounts of cost of goods sold. FIFO. LIFO.
When purchase prices are rising, which of the following statements is true? a.LIFO produces a higher cost of goods sold than FIFO. b.LIFO produces a higher cost for ending inventory than FIFO. c.FIFO produces a lower amount for net income than LIFO. d.Weighted average cost produces a higher net income than FIFO or LIFO.
Under which of the following inventory costing methodologies can lower-of-cost-or-market be used? O FIFO LIFO Weighted average Specific identification
Discuss the effect of absorption and marginal costing on inventory valuation and profit determination. Highlight both advantages and disadvantages of both methods
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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.
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17. Models of inventory systems frequently consider the relationships among a beginning inventory, a production quantity, a demand or sales, and an ending inventory. For a given production period j, let * 2, d, beginning inventory for period j (ending inventory from period j-1 production quantity in period j demand in period j ending inventory for period j a. Write the mathematical relationship or model that shows ending inventory as a function of beginning inventory, production, and demand. b. What constraint should be added if production capacity for period j is given by C, ? e. What constraint should be added if inventory requirements for period j mandate an ending inventory of at least 1;?
Explain in 175 words: Explain how the inventory valuation method (LIFO or FIFO) chosen by a company affects the cost of goods sold and net income if prices are rising. What if the prices are declining?
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