You work for a CPA firm that has been hired by Widget Tek, a merchandising company that is getting ready to expand. The president of Widget Tek is concerned with obtaining a loan for the expansion and wants to be sure that all the financial statements accurately reflect the company’s accounting records. As preparation for this assignment, you have been asked to review the effects of changing prices on three inventory costing methods: LIFO, FIFO, and weighted average. Identify the scenarios and inventory methods that result in the highest and lowest values for each item listed. Enter “Highest”, “Lowest”, or leave the box blank. Cost of Merchandise Sold Ending Merchandise Inventory Net Income LIFO, when prices are rising FIFO, when prices are falling FIFO, when prices are rising Weighted average, when prices are rising Weighted average, when prices are falling LIFO, when prices are falling
You work for a CPA firm that has been hired by Widget Tek, a merchandising company that is getting ready to expand. The president of Widget Tek is concerned with obtaining a loan for the expansion and wants to be sure that all the financial statements accurately reflect the company’s accounting records. As preparation for this assignment, you have been asked to review the effects of changing prices on three inventory costing methods: LIFO, FIFO, and weighted average. Identify the scenarios and inventory methods that result in the highest and lowest values for each item listed. Enter “Highest”, “Lowest”, or leave the box blank. Cost of Merchandise Sold Ending Merchandise Inventory Net Income LIFO, when prices are rising FIFO, when prices are falling FIFO, when prices are rising Weighted average, when prices are rising Weighted average, when prices are falling LIFO, when prices are falling
Principles of Cost Accounting
17th Edition
ISBN:9781305087408
Author:Edward J. Vanderbeck, Maria R. Mitchell
Publisher:Edward J. Vanderbeck, Maria R. Mitchell
Chapter2: Accounting For Materials
Section: Chapter Questions
Problem 2MC
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Question
You work for a CPA firm that has been hired by Widget Tek, a merchandising company that is getting ready to expand. The president of Widget Tek is concerned with obtaining a loan for the expansion and wants to be sure that all the financial statements accurately reflect the company’s accounting records.
As preparation for this assignment, you have been asked to review the effects of changing prices on three inventory costing methods: LIFO, FIFO, and weighted average.
Identify the scenarios and inventory methods that result in the highest and lowest values for each item listed. Enter “Highest”, “Lowest”, or leave the box blank.
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Cost of Merchandise Sold
|
Ending Merchandise Inventory
|
Net Income
|
LIFO, when prices are rising |
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|
|
FIFO, when prices are falling |
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|
|
FIFO, when prices are rising |
|
|
|
Weighted average, when prices are rising |
|
|
|
Weighted average, when prices are falling |
|
|
|
LIFO, when prices are falling |
|
|
|
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