ACCOUNTING- LIFO tends to decrease taxes when_______.
by ella | Aug 20, 2025 | Business
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| LIFO tends to decrease taxes when_______. (Points : 1) |
costs are declining
costs are constant
costs are increasing
LIFO will always yield the lowest possible taxes |
| Question 2.2.Which of the following inventory costing methods requires a company to keep track of the actual movement of individual inventory items? (Points : 1) |
LIFO
average cost
FIFO
specific unit cost |
| Question 3.3.Under the ________ inventory costing method, ending inventory and cost of goods sold are based on the same cost per unit that is adjusted after each new purchase. (Points : 1) |
FIFO
LIFO
average-cost
specific identification |
| Question 4.4.Using the lower-of-cost-or-market rule of valuing inventory allows the accountant to attain_______. (Points : 1) |
consistency
matching
conservatism
full disclosure |
Question 5.5.Danbury Inc. uses the periodic inventory accounting method. Information related to Danbury’s inventory is as follows for January 20X1:
|
Jan 1st – Beginning Balance
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10 units at $200
|
|
Jan 7th – Purchase
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8 units at $215
|
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Jan 22nd – Purchase
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12 units at $228
|
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Jan 31st – Ending Inventory
|
7 units
|
Danbury’s ending inventory balance using the LIFO inventory costing method is ________. (Points : 1) |
$5056.00
$1400.00
$4949.60
$1506.40 |
Question 6.6.Table 5
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January 1 inventory balance
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90 units at $10 per unit
|
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March 2 purchase
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50 units at $11 per unit
|
|
July 8 purchase
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80 units at $10 per unit
|
|
November 15 purchase
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30 units at $12 per unit
|
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December 31 inventory balance
|
75 units
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Referring to Table 5, assuming all goods are sold throughout the year for $19 per unit, gross profit calculated under the periodic LIFO method would be_______. (Points : 1) |
$1,465
$1,510
$1,260
$1,570 |
| Question 7.7.An error occurred in ABC Company’s accounting system that caused inventory to be reported at $65,000 instead of its correct value of $61,000. Overstating inventory also caused ________. (Points : 1) |
gross profit to be understated
cost of goods sold to be overstated
net income to be overstated
total assets to be understated |
| Question 8.8.Two separate errors affected Computer Sales in 20X7. The beginning inventory was overstated by $12,000 and the ending inventory was overstated by $18,000. Net income in 20X7 will be_______. (Points : 1) |
overstated by $30,000
overstated by $12,000
understated by $6,000
overstated by $6,000 |
Question 9.9.Table 4
|
Austin Company uses a periodic inventory system. Assume the following data for 20X5:
|
|
Beginning inventory
|
10 units at $7 each
|
|
March 18 purchase
|
15 units at $9 each
|
|
June 10 purchase
|
20 units at $10 each
|
|
October 30 purchase
|
12 units at $11 each
|
|
On December 31, a physical count reveals 15 units in ending inventory.
|
Referring to Table 4, under the average cost method, cost of goods sold on the income statement would be_______. (Points : 1) |
$420
$294
$389
$396 |
Question 10.10.Samson Company had the following balances and transactions during 20X3.
| Beginning inventory |
10 units at $70 |
| March 10 |
Sold 8 units |
| June 10 |
Purchased 20 units at $80 |
| October 30 |
Sold 15 units |
What would the company’s inventory amount be on the December 31, 20X3 balance sheet if the perpetual First-In, First-Out costing method is used? (Answers are rounded to the nearest dollar.) (Points : 1) |
$490
$540
$560
$554 |
| Question 11.11.Lisa’s clothing store burned down on May20th, 20X1. All inventory was destroyed. She did not keep a perpetual inventory system and did not know the value of her inventory to report to the insurance company. Beginning inventory was $13,000. She had purchases of $30,000 and sales of $29,500 from May 1st through May20th. Her gross profit margin is 35% of total sales. Lisa could estimate that her ending inventory on May20thwas ________. (Points : 1) |
$32,500
$32,675
$13,500
$23,825 |
Question 12.12.Garry Corp uses a perpetual inventory accounting system. Garry Corp has a beginning inventory of 12 units at $15 each on January 1, 20X1. The following inventory transactions occurred during the month of January:
| |
January 2nd – purchased 20 units at $16.50 each |
|
January 10th – sold 7 units
|
|
January 17th – purchased 15 units at $17.25 each |
|
January 22nd – sold 25 units
|
| |
January 30th – purchased 5 units at $17.50 each |
Garry Corp will report ________ for cost of goods sold in January using the FIFO inventory costing method. (Points : 1) |
$539.25
$317.00
$510.00
$346.25 |
Question 13.13.Table 1
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Assume the following data for Burnette Company for 20X5:
|
|
Beginning inventory
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10 units at $7 each
|
|
March 18 purchase
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15 units at $9 each
|
|
April 5 sale
|
12 units
|
|
June 10 purchase
|
20 units at $10 each
|
|
September 15 sale
|
30 units
|
|
October 30 purchase
|
12 units at $11 each
|
|
|
|
Refer to Table 1. Under the perpetual LIFO method, ending inventory would be valued at_______. (Points : 1) |
$165
$105
$153
$135 |
Question 14.14.Marshall Corp uses a perpetual inventory accounting system. Marshall Corp has a beginning inventory of 10 units at $20 each on May 1, 20X1. The following inventory transactions occurred during the month of May:
| |
May 2nd– purchased 20 units at $22 each |
|
May 9th– sold 18 units
|
|
May 15th – purchased 15 units at $24 each |
Marshall Corp will report ________ (rounded) for ending inventory on May 31st using the average-cost inventory costing method. (Points : 1) |
$400.00
$600.00
$384.00
$616.00 |
|
Question 15.15.Which of the following statements is correct? (Points : 1)
|
US GAAP allows companies to change their inventory method each year as it makes sense to do so.
There are only two different inventory costing methods used when companies follow international reporting standards.
The concept of net realizable value is only used under accounting standards for private enterprises and not under international financial reporting standards.
Inventory cost determination is the same under accounting standards for private enterprises as for international financial reporting standards. |
