When the cost of inventory is increasing: LIFO shows lower COGS and lower taxable income FIFO shows higher taxable income and higher COGS FIFO shows higher COGS and lower taxable income LIFO shows higher COGS and lower taxable income

When the cost of inventory is increasing: LIFO shows lower COGS and lower taxable income FIFO shows higher taxable income and higher COGS FIFO shows higher COGS and lower taxable income LIFO shows higher COGS and lower taxable income

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Description: When the cost of inventory is increasing:LIFO shows lower COGS and lower taxable incomeFIFO shows higher taxable income and higher COGSFIFO shows higher COGS and lower taxable incomeLIFO shows higher COGS and lower taxable income

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 4MC: In rimes of rising prices, the inventory cost method that will yield the highest cost of goods sold...

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Similar questions

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.
Explain why, in the traditional view of inventory, carrying costs increase as ordering costs decrease.
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
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 inventory is being valued at cost and the price level is steadily rising, which of the three methods of costing—FIFO, UFO, or weighted average cost—will yield the lowest an nual income tax expense? Explain.
Which inventory cost flow assumption generally results in the lowest reported amount for cost of goods sold when inventory costs are rising? a. Lower of cost and net realizable value. b. First-in, first-out (FIFO). c. Last-in, first-out (LIFO). d. Weighted-average cost.
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 determining inventory's lower of cost or net realizable value, NRV is defined as: O Selling Cost O replacement cost Osales price less selling costs Sales Price
Under the lower of cost or market inventory valuation rule, market value of inventory is defined as: a.Net realizable value. b.Net realizable value minus a normal profit margin. c.The lower of net realizable value or current replacement cost. d.Current replacement cost.
If merchandise inventory is being valued at cost and the purchase price is steadily falling, which method of costing will yield the largest net income? Select one: a. average cost. b. LIFO. c. FIFO. d. weighted average. e. All methods will result in the same figure of net 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
If merchandise inventory is being valued at cost and the price level is decreasing, which of the three methods of costing—FIFO, LIFO, or weightedaverage cost—will yield (a) the highest inventory cost, (b) the lowest inventory cost, (c) the highest gross profit, and (d) the lowest gross profit?