EBK FINANCIAL ACCOUNTING THEORY AND ANA
12th Edition
ISBN: 9781119299646
Author: CATHEY
Publisher: JOHN WILEY+SONS,INC.-CONSIGNMENT
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Question
Chapter 3, Problem 3.6C
a)
To determine
To discuss : Effect of ‘Last In First Out Method’ and ‘First In Last Out Method’ of
b)
To determine
To discuss : Concept of conservatism with reference to policy of General Motors and Ford along with policy of Honda and Daimler-Benz.
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Here is the question:
1. Assume instead, the Company uses the FIFO method in the measurement of its inventories, how much would be its cost of goods sold for the year?
When an entity prepares financial statements in a current cost basis, how is the cost of goods sold computed?
a. Number of units sold times average current cost
b. Number of units sold times current cost at year-end
c. Number of units sold times beginning current cost
d. Beginning inventory at current cost plus cost of goods purchased less ending inventory at current cost
(Multiple Choice) A multi-step income statement ________.
A. separates cost of goods sold from operating expenses
B. considers interest revenue an operating activity
C. is another name for a simple income statement
D. combines cost of goods sold and operating expenses
Chapter 3 Solutions
EBK FINANCIAL ACCOUNTING THEORY AND ANA
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- Which of the following statements are true regarding Costof Goods Sold?(i) Cost of Goods Sold represents the costs that a company incurred to purchase or produce inventory in thecurrent period.(ii) Cost of Goods Sold is an expense on the incomestatement.(iii) Cost of Goods Sold is affected by the inventorymethod selected by a company (FIFO, LIFO, etc.).a. (i) only c. (ii) and (iii)b. (ii) only d. All of the above.arrow_forwardHow much is total cost of goods manufactured? ANSWER IN GOOD ACCOUNTING FORM. THANK YOU :)arrow_forwardHow much is the total cost of goods manufactured? *Please present answer in good accounting form.arrow_forward
- 4. What is the difference between the SCI of a service entity from a merchandising entity? 5. What is the formula in computing Net Income (Loss) for Service Entities? 6. What is the formula in computing Net Sales? 7. What is the formula in computing Cost of Goods Sold?arrow_forwardView Policies Current Attempt in Progress You have the following information for Oriole Diamonds. Oriole Diamonds uses the periodic method of accounting for its inventory transactions. Oriole only carries one brand and size of diamonds-all are identical. Each batch of diamonds purchased is carefully coded and marked with its purchase cost. March 1 Beginning inventory 177 diamonds at a cost of €362 per diamond. March 3 Purchased 236 diamonds at a cost of €413 each. March 5 Sold 220 diamonds for €708 each. March 10 Purchased 413 diamonds at a cost of €456 each. March 25 Sold 472 diamonds for €767 each. (a) Assume that Oriole Diamonds uses the specific identification cost flow method. (1) Demonstrate how Oriole Diamonds could maximize its gross profit for the month by specifically selecting which diamonds to s To maximize gross profit, Oriole Diamonds should sell the diamonds with the Demonstrate how Oriole Diamonds could minimize its gross profit for the month by selecting which diamonds…arrow_forwardWhich of the following represents the components of the income statement for a service business? Select one: a. Service Revenue – Operating Expenses = operating income b. Sales Revenue – Cost of Goods Manufactured = gross profit c. Sales Revenue – Cost of Goods Sold = gross profit d. Service Revenue – Cost of Goods Purchased = gross profitarrow_forward
- How much is the cost of goods manufactured? ANSWER IN GOOD ACCOUNTING FORM. THANK YOU :)arrow_forwardWhen creating financial statements, why is it essential to create the income statement before the balance sheet? O Because sales is an essential component of the balance sheet O Because net income is required to determine the balance in retained earnings Because cost of goods sold is a component of inventory O Because S&A costs are required to determine the balance in Plant & Equipment (net). O Actually, the balance sheet must always be created first and used to create the income statement.arrow_forward14. Entities must allocate the cost of all goods available for sale between a. the cost of goods on hand at the beginning and the cost of goods purchased during the period b. the cost of goods on hand at the end and the cost of goods purchased during the period c. the income statement and the statement of financial position d. all the choices are correct.arrow_forward
- As inventoriable costs expire, they become a. sales b. cost of goods sold c. operating expenses d. gross profitarrow_forwardRequired: 1. Compute cost of goods sold for each of the two items separately using the FIFO and LIFO inventory costing methods. 2. Between FIFO and LIFO, which method is preferable in terms of (a) net income and (b) income taxes paid (cash flow)? Complete this aarrow_forward_I. A manufacturing company calculates cost of goods sold as follows: a Beginning FG inventory + cost of goods purchased - ending FG inventory. b. Ending FG inventory inventory. c. Beginning FG inventory inventory. d. Beginning FG inventory + cost of goods manufactured inventory. cost of goods manufactured + beginning FG - cost of goods manufactured - ending FG ending FGarrow_forward
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