Question

1- At December 31, 2005, Big Co. reported an unrealized holdingloss from available-for-sale securities of $1,500 on the statementof stockholders’ equity. Assuming the application of SFAS No. 115,“Accounting for Certain Investments in Debt and Equity Securities,”what amount should Stone report on its December 31, 2006 balancesheet as an unrealized holding loss? Aggregate cost as of 12/31/06$170,000 Unrealized gains as of 12/31/06 4,000 Unrealized losses asof 12/31/06 26,000 Net realized gains during 2006 30,000

$26,000

$22,000

$20,500

0

2- A firm experiencing deflation and increasing inventory willhave the highest cost of sales under the

average cost

FIFO

LIFO

cannot be determined without additional information

3-Which of the following statements about dollar-value LIFO isnot true? Dollar-value LIFO

assumes that inventory is a quantity of value rather than aquantity of physical goods

measures increases and decreases in inventory in dollar amountsrather than in the number of objects

eliminates the need for taking aphysical inventory

helps companies avoid some of theproblems associated with traditional LIFO

4-Big Co. began using thedollar-value LIFO method in 2007 when its ending inventory wascosted at $50,000. The 2008 ending inventory at year-end prices was$54,000. Calculate Big’s increase or decrease of inventory in realterms assuming 106 percent is an appropriate price index

$7,240 increase

$3,773 increase

$1,000 increase

$943 increase

5-Big Co. began using thedollar-value LIFO method in 2007 when its ending inventory wascosted at $50,000. The 2008 ending inventory at year-end prices was$54,000. Calculate Big’s ending inventory assuming 106 percent isan appropriate price index

$54,000

$51,000

$50,943

$53,057