1. In a perpetual inventory system, which of the following is recorded at the ti
ID: 2554391 • Letter: 1
Question
1. In a perpetual inventory system, which of the following is recorded at the time of the sale? A) Sales revenue only B) Both sales revenue and cost of goods sold C) Cost of goods sold only D) Neither sales revenue or cost of goods sold 2. During periods when costs are rising and inventory quantities are stable, ending inventory will be: A. Higher under LIFO than FIFO B. Lower under average cost than LIFO. C. Higher under average cost than FIFO. D. Higher under FIFO than LIFO 3. Under the LIFO retail method, which of the following are not included in the denominator of the cost-to-retail conversion percentage? A. Freight-in. B. Purchase returms. C. Purchases. D. Net markdowns. 4. The IRS LIFO conformity rule states that: A· The FIFO cost flow method does not conform to IRS requirements If the LIFO cost flow method is used to compile taxable income, it must also be used in the financial statements. C. If the FIFO cost flow method is used, a company is required to maintain LIFO reserve as a Contra-Account D. None of the above are correct. 5. Under the retail inventory method: A. A company measures inventory on its balance sheet by converting retail prices to cost B. A company measures inventory on its balance sheet at current selling prices. C. A company measures inventory on its balance sheet based on the gross profit ratio. D. None of these answer choices are correctExplanation / Answer
1. (B) sales and COGS both
2. (D) higher under FIFo then LIFO
Since Cost is rising so we will sell lower cost material first under FIFO so closing inventory will be at higher amount.
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