Question

FIFO VS. LIFO (my answers are in bold) FIFO results in OLDER (older/current) COGS and CURRENT...

FIFO VS. LIFO (my answers are in bold)

FIFO results in OLDER (older/current) COGS and CURRENT (older/current) costs in Ending Inventory

LIFO results in REPLACEMENT (older/replacement) cost in COGS and REPLACEMENT (older/replacement) costs in Ending Inventory

Assuming increasing prices, FIFO results in HIGHEST (lowest/highest) COGS, LOWEST (lowest/highest) Net Income and HIGHEST (lowest/highest) taxes.

Assuming falling prices, LIFO results in the LOWEST (lowest/highest) asset balance (Ending Inventory).

Homework Answers

Answer #1

FIFO VS LIFO

FIFO results in OLDER COGS and CURRENT costs in Ending Inventory

LIFO results in REPLACEMENT cost in COGS and OLDER costs in Ending Inventory

Assuming increasing prices, FIFO results in LOWEST  COGS, HIGHEST Net Income and HIGHEST taxes.

Assuming falling prices, LIFO results in the HIGHEST asset balance (Ending Inventory).

kindly give a positive rating if you are satisfied with the solution. Please ask if you have any query related to the question, Thanks.

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
13. When inventory costs are rising a. FIFO COGS is lowest b. FIFO COGS is highest...
13. When inventory costs are rising a. FIFO COGS is lowest b. FIFO COGS is highest c. FIFO COGS is same d. Gross Profit is lowest 14. If period 1 ending inventory is overstated, then a. COGS is understated b. Gross Profit is overstated c. Net Income is overstated d. All of the above 15. Which of these assets are not depreciated a. Computers b. Production Machines c. Cars d. Land 16. Freight Out is considered in calculating COGS a....
Comparing inventory methods Assume that a firm separately determined inventory under FIFO and LIFO and then...
Comparing inventory methods Assume that a firm separately determined inventory under FIFO and LIFO and then compared the results. 1. In each of the below, select the less than, greater than, or equal sign for each comparison, assuming periods of rising prices. a. FIFO ending inventory LIFO ending inventory b. FIFO cost of goods sold LIFO cost of goods sold c. FIFO net income LIFO net income d.FIFO income tax LIFO income tax 2. Why would management prefer to use...
P7-5 (Algo) Evaluating the LIFO and FIFO Choice When Costs Are Rising and Falling LO7-2, 7-3...
P7-5 (Algo) Evaluating the LIFO and FIFO Choice When Costs Are Rising and Falling LO7-2, 7-3 [The following information applies to the questions displayed below.] Income is to be evaluated under four different situations as follows: a. Prices are rising: (1) Situation A: FIFO is used. (2) Situation B: LIFO is used. b. Prices are falling: (1) Situation C: FIFO is used. (2) Situation D: LIFO is used. The basic data common to all four situations are sales, 502 units...
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...
The management of Svetlana Corp. is considering the effects of inventory-costing methods on its financial statements...
The management of Svetlana Corp. is considering the effects of inventory-costing methods on its financial statements and its income tax expense. Assuming that the price the company pays for inventory is increasing, which method will: a. Provide the highest net income, LIFO or FIFO? b. Provide the highest ending inventory, LIFO or FIFO? c. Result in the lowest income tax expense, LIFO or FIFO?
The management of Svetlana Corp. is considering the effects of inventory-costing methods on its financial statements...
The management of Svetlana Corp. is considering the effects of inventory-costing methods on its financial statements and its income tax expense. Assuming that the price the company pays for inventory is increasing, which method will: a. Provide the highest net income, LIFO or FIFO? b. Provide the highest ending inventory, LIFO or FIFO? c. Result in the lowest income tax expense, LIFO or FIFO?
Analyzing Inventory Disclosure Comparing LIFO and FIFO The current asset section of the 2014 and 2013...
Analyzing Inventory Disclosure Comparing LIFO and FIFO The current asset section of the 2014 and 2013 fiscal year end balance sheets of The Kroger Co. are presented in the accompanying table: $ millions January 31, 2015 February 1, 2014 Current assets Cash and temporary cash investments $188 $825 Deposits in-transit 786 666 Receivables 949 845 FIFO inventory 6,297 5,793 LIFO credit (1,083) (827) Prepaid and other current assets 288 319 Total current assets $7,425 $7,621 In addition, Kroger provides the...
Just wondering if someone can clarify why the ROA ratio will be higher under the LIFO...
Just wondering if someone can clarify why the ROA ratio will be higher under the LIFO inventory accounting method in comparison with the FIFO inventory accounting method. I understand that under LIFO (in the case of rising prices) COGS will be higher which will reduce net income, but the ending inventory and thus total assets will also be lower. I am assuming that the reduced affect on net income from using LIFO as opposed to FIFO will be less than...
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 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...