Question

kam III 5.In a period of rising prices, FIFO will have OOO 10 ibnsdora a. lower net income than LIFO. b. lower cost of goods sold than LIFO. c. lower income tax expense than LIFO. d. lower net purchases than LIFO. 16.The inventory turnover is computed by dividing cost of goods sold by a. beginning inventory. b. ending inventory. c. average inventory. d. 365 days. 17. Barley Company developed the following information about its inventories realizable value (LCNRV) basis in valuing inventories: Product Cost Net Realizable Value $115,000 $120,000 80,000 73,000 158,000 162,000 If Barley applies the LCNRV basis, the value of the inventory reported on tl a. $346,000. b. $353,000 c. $355,000. d. $362,000. 18.Interest is usually associated with a. accounts receivable. b. notes receivable. c. doubtful accounts. d. bad debts.

Answer 1

Question 15: The correct answer is: b. lower cost of goods sold than LIFO. When the prices rise under FIFO then the ending inventory increases and the Cost of goods sold is lower as compared to the LIFO inventory method. Question 16: The correct answer is: c. average inventory. The inventory turnover ratio is computed by dividing the cost of goods sold by the average inventory. Question 17: The correct answer is: b. $353,000. Applying LCNRV method to the total of the inventory: Net realisable Product Cost value $115,000 $120,000 $80,000 $73,000 $158,000 $162,000 Total $353,000 $355,000 Inventory (Lower of cost or NRV) $353,000 Question 18: The correct answer is: b. notes receivable. Generally, interest is associated with notes receivable because interest is applicable on the amount due from the customers or borrowers.