13. When prices are falling, which of the following statements are generally tru
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Question
13. When prices are falling, which of the following statements are generally true? a. Using LIFO as the inventory cost method will result in higher total assets than will result if FIFO is used as the inventory cost method b. Using Average cost as the inventory cost method will result in the highest possible total asset balance of any available cost method Using LIFO as the inventory cost method will result in higher Cost of goods sold than will result if FIFO is used as the inv entory cost method c. d. Using the FIFO periodic system will result in higher Cost of Goods Sold than will result if the e FIFO perpetual system is used NIFO will produce the highest Cost of goods Sold 14. When prices are rising, whach of the following inventory methods will result ina the highest debt to equity ratio? a. FIFO b. LIFO c. Average cost d HIFO e The ratios will be the same. 15, LIFO liquidation occurs when a. All of the inventory is exposed to extreme heat, causing it to melt b. Ending inventory is higher than beginning inventory c. Beginning inventory is higher than ending inventory, causing old costs to be reflected in Cost of Goods Sold d Inventory grows at an extreme pace e. Management throws all of the inventory mnto the company inventory "pool" at the annual summer barbecue 6. Sam's Fresh Fish is a nasonal cham of fish markets. Generaly accepted accounting principles require that Sam's use which of the followingExplanation / Answer
13. When prices are falling, which of the following statements are generally true?
Ans: c. Using LIFO as the inventory cost method will result in higher cost of goods sold than will result if FIFO is used as the inventory cost method
Explanation: Under LIFO method the recent costs of products purchased are the first costs expensed as the cost of goods sold which means that the costs of the oldest products will be reported as inventory.
14. When prices are rising which of the following inventory methods will result in the higher debt to equity ratio?
Ans: a. FIFO is the right answer; FIFO will result in higher inventory balances and high expense will be reported
15. LIFO liquidation occurs when
Ans: C. Beginning inventory is higher than the ending inventory, causing costs to be reflected in cost of goods sold.
Actually LIFO liquidation occurs when a company is LIFO method and sells the old stock or merchandise
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