Assuming no beginning inventory, what can be said about the trend of inventory prices if cost of goods sold computed when inventory is valued using the FIFO method exceeds cost of goods sold when inventory is valued using the LIFO method? a. Prices decreased. b. Prices remained unchanged. c. Prices increased. d. Price trend cannot be determined from information given.

Q: Which inventory valuation method would yield the lowest cost of goods sold in periods of rising…

A: “Since you have asked multiple question, we will solve the first question for you. If you want any…

Q: Under the LIFO cost flow assumption during a period ofinflation, which of the following is false? A.…

A: Inflation and cost of goods sold - a company selling goods during periods of inflation will see an…

Q: der the periodic inventory system, all increases and decreases in inventory, such as purchases,…

A: Solution: False.  Under periodic inventory system Daily inventory records are not maintained.

Q: A company records inventory at gross invoice price. Theoretically, how should the following affect…

A: Solution: Interest on inventory loan do not affect cost of inventory, it is working capital loan…

Q: Which of the following variations of the reail inventory method would generally result in the lowest…

A: FIFO is a method used to value inventories. In First-In-First-Out (FIFO) method the cost of the…

Q: 3. Indicate the effect of the following errors on gross profit and cost of goods sold (COGS), i.e.,…

A: Solution Concepts Purchase account is an expense and if it is understated profit will increase and…

Q: On the basis of the following data, determine the value of the inventory at the lower of cost or…

A: As per US GAAP (Generally accepted accounting principles), inventory is required to valued at lower…

Q: In a period of rising prices, the inventory method which tends to give the highest reported…

A: During a period of rising prices FIFO Method is expected to give highest reported inventory as in…

Q: Jamison Corporation’s inventory cost in its balance sheet is lower using the first-in, first-out…

A: Option b. down is the answer.

Q: Choose the statement which is correct. Assume that inventory prices are rising. Select one: a. The…

A: LIFO means last in first out where as FIFO means first in first out. Inventory and cost of goods…

Q: Compared to using the FIFO method to account for inventory, during periods of risingprices, a…

A: USING OF LIFO METHOD

Q: Inventory on the Balance Sheet On the basis of the following data, determine the value of the…

A:

Q: A company's inventory cost was lower in FIFO than it would have been using LIFO. Assuming no…

A: Inventory is the stock of goods with the company which is ready to sell out. It covers large…

Q: If the inventory is valued at cost and the price level is steadily increasing, which type of…

A: Under FIFO, goods that are purchased initially are sold first, however, under LIFO it is assumed…

Q: Assuming that all net sales figures are at retail and all cost of goods sold figures are at cost,…

A: Inventories refer to the stock of goods that is held for the ultimate purpose of resale.

Q: In a period of rising prices, the inventory cost allocation method that tends to result in the…

A: In the period of rising prices, method resulting in highest net income would be the method under…

Q: Which of the following statements is incorrect?

A: Cost of Goods Sold: Cost of Goods sold is the Cost of the items that are sold it is calculated for…

Q: gross profit method assumes

A: The gross profit technique calculates the value of inventory by combining current period data on net…

Q: If beginning inventory is understated by $980O, the effect of this error in the current period is…

A: The COGS is determined based on beginning inventory, inventory purchase, and closing inventory. COGS…

Q: Under which method of inventory valuation, the average price used for valuation of goods issued is…

A: Inventory is the material in which the business deal. It is a very important component of company…

Q: If purchases were recorded correctly but ending physical inventory is understated, which one of the…

A: Working capital, conjointly referred to as web assets (NWC), is that the distinction between a…

Q: Vaughn Co. decides at the beginning of 2020 to adopt the FIFO method of inventory valuation. Vaughn…

A: a. VAUGHN CO. Income Statement For the Year Ended December 31 LIFO   2018 2019 2020…

Q: Under which method of inventory valuation, the average price is calculated considering the both the…

A: The weighted average technique divides the cost of available products by the quantity of units…

Q: Under the perpetual inventory system, cost of goods sold is debited when inventory is sold and…

A: Solution: Under perpetual inventory system, inventory is updated with every purchase and sales. Cost…

Q: Do you agree with the following statements? Express your opinion on each statement.

A: 1: This statement is correct  This can be explained with the help of example: Suppose closing stock…

Q: Assume that a firm separately determined inventory under FIFO and LIFO and then compared the…

A: FIFO is a method of costing inventory in which the inventory purchased first is out first for…

Q: Assuming no beginning inventory, what can be said about the trend of inventory prices if cost of…

A: "Since you have asked multiple questions, we will solve first question for you. If you want any…

Q: On the basis of the following data, determine the value of the inventory at the lower of cost or…

A: The lower cost or market method is used for the valuation of inventory, where the inventory is…

Q: The process of recording inventory that gives a lower cost of a commodity sold in an income…

A: The inventory can be valued using various methods as LIFO, FIFO and average method.

Q: the ending inventory of a firm is overstated by $49,000, by how much and in what direction…

A: Solution Concept Mathematically Cost of goods sold       =beginning inventory + purchase – ending…

Q: Which one of the following statements is true? a. Under conditions of rising prices, the LIFO…

A: Step 1    Last in, first-out (LIFO) is inventory method in which the costs of the most recent…

Q: When there are no inventory at the beginning or at the end of the period, the total purchases will…

A: Cost of sales means actual cost of goods that is being sold to the customers. It includes beginning…

Q: An increase in the inventory turnover rate is indicative of: Multiple Choice a decrease in the cost…

A: Inventory turnover rate is calculated as ratio of cost of goods sold and inventory

Q: Which of the following is used to analyze the efficiency and effectiveness of inventory management?…

A: Formulas:  Inventory turnover ratio = Cost of goods sold / Average inventory Days' sales in…

Q: On the basis of the following data, determine the value of the inventory at the lower of cost or…

A: Lower of cost or market price means we should select lower price between them at which inventory is…

Q: On the basis of the data shown below: Item Inventory Quantity Cost per Unit Market Value per Unit…

A: Lower of cost or market  is a method of valuing inventory either baed on the historical cost or the…

Q: Lower-of-Cost-or-Market Method On the basis of the data shown below:   Item InventoryQuantity…

A: Calculation of value of inventory using lower of cost or market value:

Q: Merchandise inventory at the end of the year is overstated. Which of the following statements…

A: Merchandise inventory at the end of the year is the closing stock which is reported in the balance…

Q: When using the periodic LIFO inventory cost method, which of the following statements is true? a.The…

A: As per the LIFO method, goods purchased last or most recent purchases would be sold first.   Which…

Q: On the basis of the following data, determine the value of the inventory at the lower of cost or…

A: Lower-of-cost-or-market value: The lower-of-cost-or-market value is a method which requires the…

Q: a period in which the cost of inventory is rising, which of the following statements is true? The…

A: Issue of Material and its valuation: When the material purchased then that material is stored at its…

Q: On the basis of the following data, determine the value of the inventory at the lower of cost or…

A: At the time of evaluating the inventory, the cost or market value whichever is lower is taken into…

Q: Which of the following regarding the lower of cost ormarket rule for inventory are true?(i) The…

A: Option c is correct.

Q: 3. Indicate the effect of the following errors on gross profit and cost of goods sold (COGS), i.e.,…

A: Cost of goods sold (COGS)- The cost incurred on the goods sold during the period is referred to as…

Inventory Valuation

Before discussing the topic inventory valuation let’s discuss the meaning of inventory. In accounting, inventory is also known as stock. Inventory means all the finished goods, materials, merchandise that a business holds for the purpose of selling it in the market with the motive of earning profit.