used to develop the information in financial statements (Libby, Libby, Short. pg. 16). When reporting inventory, there are generally four inventory reporting methods used; Specific identification method, first-in, first-out method (FIFO), last-in, first out method (LIFO), and average cost method. Each method is in conformity with GAAP and the law. Also each method has their own implications during periods of inflation and deflation. They can also affect the net income results reported in the financial
Words: 724 - Pages: 3
CHAPTER 20 QUESTIONS 1. Comparability enables users to relate accounting information to a benchmark or standard. The benchmark may be in the form of another firm’s financial statements or financial data of the same firm but for some other time period. An accounting change could make it difficult to compare data from one period to another or from one firm to another, thus detracting from comparability. For example, if a company switched from straight-line depreciation to double-declining-balance
Words: 10780 - Pages: 44
Accounting 2301 – Practice Questions for Exam #2 1. Mahler Company began the accounting period with a $5,000 debit balance in its accounts receivable account. During the accounting period Mahler recorded revenue on account amounting to $17,000. The accounts receivable account at the end of the accounting period contained a $8,000 debit balance. Based on this information alone, the cash collected from accounts receivables during the period is A) $14,000 B) $17
Words: 3002 - Pages: 13
Circle the one best answer. 1. A private organization which establishes broad accounting principles as well as specific accounting rules is the a. Securities and Exchange Commission. b. Internal Revenue Service. c. Financial Accounting Standards Board. X d. Corporate Board of Directors. 2. An increase in an expense a. increases revenues. b. increases assets. c. decreases liabilities. d. decreases stockholders’ equity. X 3
Words: 1536 - Pages: 7
perpetual inventory system. Determine the costs assigned to the December 31 ending inventory when costs are assigned based on (a) FIFO, (b) LIFO, (c) weighted average, and (d ) specific identification. December 7 10 units @ $ 6 cost December 14 20 units @ $12 cost December 21 15 units @ $14 cost a) FIFO = 15 @ 12/unit + 15@ 14 per unit = $390 b) LIFO = 10 @ 6/unit + 20@ 12 per unit = $300 c) Weighted average = 30 units @ 11.33 per unit = $340 d) specific identification = 2
Words: 544 - Pages: 3
process, finished goods, and/or merchandise inventory. The balance in this account is also affected by accounting decisions. Accounting standards permit various acceptable inventory measurement methods, including last-in-first-out (LIFO), first-in-first-out (FIFO), weighted average, and specific identification. Specific identification has been used most frequently for inventories in which the separate items are distinct and have a high cost, such as fine jewelry, because the benefit to be gained
Words: 353 - Pages: 2
Topic: Inventory Valuation (continue) These are assumptions of sequencing, but should know the cost of associated with whatever went out. Four (4) key methods of inventory valuation Method # 1: First In First Out (FIFO) First items to come into inventory are the first to leave Last items to come into inventory remain in inventory Method 2 Last in First Out (L-I-F-O) Last (most recent) items to come into inventory are first to leave inventory 1st items to come in remain in
Words: 798 - Pages: 4
2.36 TXN: TXN: TXN: TXN: 3.44 3.21 3.50 3.43 4. General Electric Company reports the following footnote in its 10-K report. The company reports its inventories using the LIFO inventory costing method. Assume GE has a 35% income tax rate. As of the 2005 year-end, how much has GE saved in taxes by choosing LIFO over FIFO method for costing inventory? a. b. c. d. $6,705 million $475 million $3,610 million $244 million Cambridge Business Publishers, ©2010 Quiz 6-2 Financial & Managerial Accounting
Words: 959 - Pages: 4
2012 Students: These sample questions were pulled from last year’s exam. Note that not all the material covered to this point matches up with what I did last year. Hence some material below may be unfamiliar to you. However, these are reasonably representative of the type of questions you are likely to see. 1.Financial accounting a) provides useful information primarily for external decision makers. b) is required for corporations but probably would not be done by other business entities. c) provides
Words: 2205 - Pages: 9
Memorandum To: Richard Johnson, President From: Robert Kinkaid, Financial Vice President Subject: Appraise for the proposals Date: October 4. 2015 This memo writes for appraising president’s proposals. The Depreciation Method: It is hard to eliminate deferred tax liability through changing the depreciation method from tonnage-of-production method to straight line depreciation method. At the first, there is a comparison different depreciation method. Unit-of-production method is a depreciation
Words: 2189 - Pages: 9
