Question

If you were attempting to maximize your net income, which inventory cost flow assumption would you...

If you were attempting to maximize your net income, which inventory cost flow assumption would you choose? Why? What conditions must exist for this method to produce the highest net income? When perpetual inventory records are kept, the results under the FIFO and LIFO methods are the same as they would be in a periodic inventory system.” Do you agree? Explain.

Homework Answers

Answer #1

>> Generally Net income be more if Closing Inventory is higher.

In Inflation Market , the Inventory price of lastest goods show higher price, So then FIFO method shows higher closing Inventory value. In this Case FIFO shows higher Net Income.

In deflation market, LIFO method shows Closing Inventory shows higher Value. In this case LIFO shows higher income.

>> Only FIFO Method shows same Inventory value under perpetual Inventory method and periodic method.

But LIFO Method, Inventory Value varies in two methods of Periodic and perpetual Inventory Method.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Mannisto, Inc., uses the FIFO inventory cost flow assumption. In a year of rising costs and...
Mannisto, Inc., uses the FIFO inventory cost flow assumption. In a year of rising costs and prices, the firm reported net income of $262,952 and average assets of $1,590,420. If Mannisto had used the LIFO cost flow assumption in the same year, its cost of goods sold would have been $32,360 more than under FIFO, and its average assets would have been $33,860 less than under FIFO. Required: a. Calculate the firm's ROI under each cost flow assumption (FIFO and...
Which inventory cost flow assumption generally results in the highest reported amount for cost of goods...
Which inventory cost flow assumption generally results in the highest reported amount for cost of goods sold when inventory costs are falling? Weighted-average cost. LIFO. Straight-line. FIFO.
Which of the following is true concerning inventory cost flow assumptions? LIFO produces higher net income...
Which of the following is true concerning inventory cost flow assumptions? LIFO produces higher net income than FIFO in a period of rising costs. None of the other answers are true. FIFO is an income statement focus. LIFO is a balance sheet focus.
1. In a period of rising prices, which of the following inventory methods generally results in...
1. In a period of rising prices, which of the following inventory methods generally results in the lowest net income figure? A. Average cost method B. FIFO method C. LIFO method D. Need more information to answer 2. In a period of rising prices, which of the following inventory methods generally results in the lowest cost of goods sold figure? A. LIFO method B. FIFO method C. Need more information to answer D. Average cost method 3. In a period...
In 2022, Karen Corporation changed its method of inventory pricing from LIFO to FIFO. Net income...
In 2022, Karen Corporation changed its method of inventory pricing from LIFO to FIFO. Net income computed on a LIFO as compared to a FIFO basis for the four years involved is: (Ignore income taxes.) LIFO FIFO 2019 $78,900 $87,300 2020 84,500 88,800 2021 86,900 90,300 2022 92,900 92,900 Indicate the net income that would be shown on comparative financial statements issued at 12/31/22 for each of the four years, assuming that the company changed to the FIFO method in...
In 2022, Karen Corporation changed its method of inventory pricing from LIFO to FIFO. Net income...
In 2022, Karen Corporation changed its method of inventory pricing from LIFO to FIFO. Net income computed on a LIFO as compared to a FIFO basis for the four years involved is: (Ignore income taxes.) LIFO FIFO 2019 $78,800 $87,200 2020 84,400 88,700 2021 86,300 90,000 2022 92,400 92,500 Indicate the net income that would be shown on comparative financial statements issued at 12/31/22 for each of the four years, assuming that the company changed to the FIFO method in...
Which method of inventory would you choose to use if you were: (1) a CEO of...
Which method of inventory would you choose to use if you were: (1) a CEO of a company just going public and (2) a CEO of a company short on cash? FIFO, LIFO, or Average Cost Method.
(a). A company can choose to use a variety of inventory valuation methods under GAAP. Would...
(a). A company can choose to use a variety of inventory valuation methods under GAAP. Would the use of one certain method require more testing of controls than another method? Why or why not? (b) Why is a physical count taken under both a perpetual and periodic inventory system? (c) Do you think the same level of controls are needed for period and perpetual systems?
Which of the following statements is true of the LIFO cost flow assumption a. LIFO yields...
Which of the following statements is true of the LIFO cost flow assumption a. LIFO yields a higher net income than FIFO and averaging in a period of rising prices. b. LIFO provides a better matching of current costs and expenses. c. LIFO yields a higher cost of goods sold than other costing methods, in periods of falling prices. d. LIFO yields a lower ending inventory than other costing methods, in periods of falling prices. e. LIFO puts the earliest...
If a company values inventory at the lower of cost or market, which of the following...
If a company values inventory at the lower of cost or market, which of the following is the value of merchandise inventory on the balance sheet? Apply the lower-of-cost-or-market method to inventory as a whole. Item Inventory Quantity Unit Cost Price Unit Market Price Product C 420 $ 6 $ 5 Product D 370 12 14 a.$6,540 b.$7,700 c.$6,960 d.$7,280 During times of rising prices, which of the following is not an accurate statement? a.LIFO will result in higher income...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT