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QUESTION 38 Which of the following statements is true? a. Assuming perpetual method, LIFO ending inventory...

QUESTION 38

  1. Which of the following statements is true?

a.

Assuming perpetual method, LIFO ending inventory will be higher than that of when periodic method is used.

b.

Assuming periodic method, LIFO ending inventory under will be higher than that if perpetual method is used.

c.

If either perpetual or periodic inventory method is used, FIFO ending inventory and cost of goods sold will be the same.
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Homework Answers

Answer #1

Perpetual method of accounting means for every transaction of sales and purchase will affect the stock. It means closing stock is valued at after every transaction.

But in periodical method closing stock is valued at only end of the period only. So there is no difference in total value of Closing Stock in the both method of inventory valuation. (Perpetual Method & Periodical Method)

Difference is only we can determine the closing stock in perpetual method is at every transaction and in periodical method at only end of the period.

Answer = A)

Closing stock value is the same for periodical method and perpetual method it means the given statement is not correct.

Answer = False

Answer = B)

Closing stock value is the same for periodical method and perpetual method it means the given statement is not correct.

Answer = False

Answer = C)

As mentioned above there is no effect in closing stock so the Cost of Goods Sold will also came same in the both method and so the given statement is also correct.

Answer = True

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