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101 the u s gaap requires firms using lifo to disclose in notes to the financial sta 4297463

 

 

101. The U.S. GAAP requires firms using LIFO to disclose in notes to the financial statements 
A. the amounts by which inventories based on FIFO or current cost exceed their amounts as reported on a LIFO basis
B. the amounts by which inventories based on LIFO exceed their amounts as reported on a FIFO or current cost basis
C. the amounts by which inventories based on LIFO exceed their amounts as reported on a specific identification or current cost basis
D. the amounts by which inventories based on specific identification or current cost exceed their amounts as reported on a LIFO basis
E. none of the above

 

102. Addison Hardware

Addison Hardware began the month of November with 150 large brass switchplates on hand at a cost of $4.00 each. These switchplates sell for $7.00 each. The following schedule presents the sales and purchases of this item during the month of November.
 

 

Purchases

 

Date of Transaction

Quantity Received

Unit Cost

Units Sold

November 5

 

 

100

November 7

200

$4.20 

 

November 9

 

 

150

November 11

200

4.40

 

November 17

 

 

220

November 22

250

4.80

 

November 29

 

 

100

 

 

 

 

(CMA adapted, Dec 92 #25) Refer to the Addison Hardware example. If Addison uses FIFO inventory pricing, the value of the inventory on November 30 would be 
A. $936
B. $1,046
C. $1,076
D. $1,104
E. $1,204

 

103. Addison Hardware

Addison Hardware began the month of November with 150 large brass switchplates on hand at a cost of $4.00 each. These switchplates sell for $7.00 each. The following schedule presents the sales and purchases of this item during the month of November.
 

 

Purchases

 

Date of Transaction

Quantity Received

Unit Cost

Units Sold

November 5

 

 

100

November 7

200

$4.20 

 

November 9

 

 

150

November 11

200

4.40

 

November 17

 

 

220

November 22

250

4.80

 

November 29

 

 

100

 

 

 

 

(CMA adapted, Dec 92 #27) Refer to the Addison Hardware example. If Addison uses weighted average inventory pricing, the gross profit for November would be 
A. $1,046
B. $1,482
C. $1,516
D. $1,574
E. $1,146

 

104. Addison Hardware

Addison Hardware began the month of November with 150 large brass switchplates on hand at a cost of $4.00 each. These switchplates sell for $7.00 each. The following schedule presents the sales and purchases of this item during the month of November.
 

 

Purchases

 

Date of Transaction

Quantity Received

Unit Cost

Units Sold

November 5

 

 

100

November 7

200

$4.20 

 

November 9

 

 

150

November 11

200

4.40

 

November 17

 

 

220

November 22

250

4.80

 

November 29

 

 

100

 

 

 

 

Refer to the Addison Hardware example. A growing firm is contemplating switching from a FIFO to a LIFO cost flow assumption for inventories and cost of goods sold because it has recently experienced increasing manufacturing costs for its products and anticipates a prolonged period of increasing quantities and manufacturing costs in the future. The firm wishes to know which of the following statements about the effect of the switch to LIFO is correct, relative to remaining on FIFO (ignore income tax effects): 
A. the current ratio will be higher
B. the inventory turnover will be lower
C. the cost of goods sold to sales percentage will be lower
D. all of the above
E. none of the above

 

105. Addison Hardware

Addison Hardware began the month of November with 150 large brass switchplates on hand at a cost of $4.00 each. These switchplates sell for $7.00 each. The following schedule presents the sales and purchases of this item during the month of November.
 

 

Purchases

 

Date of Transaction

Quantity Received

Unit Cost

Units Sold

November 5

 

 

100

November 7

200

$4.20 

 

November 9

 

 

150

November 11

200

4.40

 

November 17

 

 

220

November 22

250

4.80

 

November 29

 

 

100

 

 

 

 

(CMA adapted, Dec 92 #28) Refer to the Addison Hardware example. If Addison uses (periodic) LIFO inventory pricing, the cost of goods sold for November would be 
A. $2,416
B. $2,474
C. $2,508
D. $2,584
E. $2,684

 

106. Inventory Record

The inventory record for a particular item for Year 2 appears below.
 

Inventory, January 1, Year 2

20,000

$0.20

$4,000

Purchases:

 

 

 

   March 2

4,000

.24

$   960

   April 30

3,000

.28

840

   June 15

6,000

.32

1,920

   September 30

2,000

.26

520

   December 15

  1,000

.20

     200

      Total purchases

16,000

 

$4,440

Total available for sale

36,000

 

$8,440

Units sold

28,000

 

 

 

 

 

 

Refer to the Inventory Record example. The cost of goods sold for year 2 under FIFO is: 
A. $6,040
B. $6,120
C. $6,320
D. $6,520
E. $6,840

 

107. Inventory Record

The inventory record for a particular item for Year 2 appears below.
 

Inventory, January 1, Year 2

20,000

$0.20

$4,000

Purchases:

 

 

 

   March 2

4,000

.24

$   960

   April 30

3,000

.28

840

   June 15

6,000

.32

1,920

   September 30

2,000

.26

520

   December 15

  1,000

.20

     200

      Total purchases

16,000

 

$4,440

Total available for sale

36,000

 

$8,440

Units sold

28,000

 

 

 

 

 

 

Refer to the Inventory Record example. The cost of goods sold for year 2 under LIFO is: 
A. $6,120
B. $6,320
C. $6,520
D. $6,840
E. $6,940

 

108. Inventory Record

The inventory record for a particular item for Year 2 appears below.
 

Inventory, January 1, Year 2

20,000

$0.20

$4,000

Purchases:

 

 

 

   March 2

4,000

.24

$   960

   April 30

3,000

.28

840

   June 15

6,000

.32

1,920

   September 30

2,000

.26

520

   December 15

  1,000

.20

     200

      Total purchases

16,000

 

$4,440

Total available for sale

36,000

 

$8,440

Units sold

28,000

 

 

 

 

 

 

Refer to the Inventory Record example. The cost of goods sold for year 2 under weighted-average cost-flow assumption is (rounded to the nearest dollar): 
A. $7,772
B. $6,972
C. $6,564
D. $6,220
E. $6,020

 

109. A firm using FIFO had a beginning inventory of $48,000, an ending inventory of $56,000, and a pretax income of $400,000. If it had used LIFO, its beginning inventory would have been $20,000, its ending inventory would have been $16,000, and its pretax income would have been: 
A. $374,000
B. $388,000
C. $396,000
D. $404,000
E. $412,000

 

110. A firm using FIFO had a beginning inventory of $48,000, an ending inventory of $56,000, and a pretax income of $400,000. If it had used LIFO, its beginning inventory would have been $20,000, and its ending inventory would have been $16,000. From the information provided, one can conclude that: 
A. quantities increased and prices decreased
B. quantities decreased and prices increased
C. prices increased but we cannot conclude what happened to quantities
D. quantities decreased but we cannot conclude what happened to prices
E. not enough information to reach a conclusion

 

 

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