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.

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.

College Accounting, Chapters 1-27

23rd Edition

ISBN:9781337794756

Author:HEINTZ, James A.

Publisher:HEINTZ, James A.

Chapter13: Accounting For Merchandise Inventory

Section: Chapter Questions

Problem 5MC: In the application of lower-of-cost-or-market, market is the (a) lowest sales price. (b) highest...

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How would reported income differ if LIFO rather than FIFO were used when purchase prices are rising? When purchase prices are falling?
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
Gross profit will be the: A. highest if LIFO is used and inventory costs are decreasing. B. highest if FIFO is used and inventory costs are increasing. C. lowest if LIFO is used and inventory costs are increasing. D. all of the above
For each of the following situations, indicate whether FIFO, LIFO, or weighted average applies: a. In a period of falling prices, net income would be highest. b. In a period of falling prices, the unit cost of goods would be the same for ending inventory and cost of goods sold. c. In a period of rising prices, net income would be highest. d. In a period of rising prices, cost of goods sold would be highest. e. In a period of rising prices, ending inventory would be highest.
During periods of rising prices, which method (FIFO-LIFO-AVCO) results in the highest gross profit? Why?
Which method would produce the same unit cost for Inventory and Cost of Good Sold in periods of rising prices? Select one: a. Weighted Average b. FIFO c. LIFO
When applying lower of cost or net realizable value under the FIFO, average cost, or specific identification method, market value a.is defined as the selling price. b.should not exceed the net realizable value plus an allowance for a normal profit margin. c.should not exceed the net realizable value less an allowance for a normal profit margin. d.is defined as the net realizable value.
Please provide some explanation for the below question: 1. When applying lower of cost or market, market value A. is defined as the selling price B. should not exceed the net realizable value C. should not exceed the net realizable value less an allowance for a normal profit margin D. should not exceed the net realizable value plus an allowance for a normal profit margin
Is the cost of sales under weighted average always greater than the cost of sales in FIFO?
Is it always higher in cost of goods sold in Weighted average compared to FIFO?
When the return on sales (also known as net profit margin) is negative, what does this mean? Group of answer choices Costs and expenses combined are bigger than sales Sales is smaller compared to net income The tax amount is higher than sales Cost of goods and operating expenses are higher than sales
Which of the following statements about profit measurement under absorption and marginal costing is not true (assuming that unit variable costs and fixed costs are constant)? O A. If inventory levels increase then profits measured using absorption costing will be higher than profits measured using marginal costing. O B. If inventory levels decrease then profits measured using marginal costing will be higher than profits measured using absorption costing. OC. Profits measured using absorption costing will be either lower or higher than profits measured using marginal costing. O D. Profits measured using absorption costing may be the same as, or lower than, or higher than profits measured using marginal costing.