If merchandise inventory is being valued at cost and the purchase price is steadily falling, which method of costing will yield the largest net income? Select one: a. average cost. b. LIFO. c. FIFO. d. weighted average. e. All methods will result in the same figure of net income.

Q: On a multiple-step income statement, the excess of net sales over the cost of merchandise sold is…

A: Net sale is the amount of revenue that has been earned by the an entity after deducting returns and…

Q: Which of the following statements is correct? Group of answer choices A)The choice of an inventory…

A: SOLUTION AVERAGE COST METHOD IS USED TO CALCULATE THE COST OF INVENTORY AT THE END AND ALSO THE COST…

Q: Which of the following variations of the reail inventory method would generally result in the lowest…

A: FIFO is a method used to value inventories. In First-In-First-Out (FIFO) method the cost of the…

Q: The inventory valuation method that has the advantages of assigning an amount to inventory on the…

A: Inventory means the stock of goods in hand . Goods means the thing in which the business deals and…

Q: Contrast the income statement effect of LIFO versus FIFO(on Cost of Goods Sold and Gross Profit)…

A: Last-in-First-Out (LIFO): In this method, items purchased recently are sold first. So, the value of…

Q: Which inventory cost flow assumption generally results in the lowest reported amount for cost of…

A: The answer will be FIFO, First-in, first-out i.e. option B.

Q: Identify that if prices are rising, which inventory cost flow method will produce the highest amount…

A: solution Identify that if prices are rising, which inventory cost flow method will produce the…

Q: Which of the following statements is NOT true of Economic Order Quantity? O A. The economic order…

A: EOQ: Economic Order Quantity is basically the optimal quantity of number of orders which in turn…

Q: Which of the following variations of the retail inventory method would generally result in the…

A: Rising prices basically means the situation where the prices of inventory keep on rising with each…

Q: The number of units that a company should add to inventory with each order to minimize the total…

A:

Q: In a period of rising prices, the inventory cost allocation method that tends to result in the…

A: In the period of rising prices, method resulting in highest net income would be the method under…

Q: If costs are declining, will the LIFO or FIFO method of inventory valuation yield the lower cost of…

A: Inventory cost flow assumptions: These are the methods used by the companies to compute the cost…

Q: FAST PLZ - Which of the following element of cost is important in calculating the cost of closing…

A: Cost of goods sold means the cost incurred on the manufacturing or purchase of goods which has been…

Q: Assuming that the price the company pays for inventory is increasing, which method will:

A: The appropriate answer is shown below

Q: The cost method that will yield an ending inventory value that is somewhere between possible high…

A: Inventory valuation has 4 Methods - 1. FIFO 2. LIFO 3. Weighted Average 4. Specific Identification…

Q: ith inflation, what are the implications of using LIFO and FIFO inventory methods? How do they…

A: FIFO: First in, first out (FIFO) is a method of asset management and valuation in which assets…

Q: When purchase prices are rising, which of the following statements is true? a.LIFO produces a…

A: FIFO method means first in first out which means that cost of goods sold valued at older prices and…

Q: hen purchase costs regularly rise, the inventory costing method that yields the highest reported net…

A: The inventory can be valued using various methods as LIFO, FIFO, average and specific identification…

Q: If costs are rising, which of the following will be true?a. The cost of goods sold will be greater…

A:

Q: Which of the following is the same as 'net realisable value' of inventory?   a. proceeds of sale…

A: The question is multiple choice question  Required  Choose the Correct Option.

Q: Assume that a firm separately determined inventory under FIFO and LIFO and then compared the…

A: FIFO is a method of costing inventory in which the inventory purchased first is out first for…

Q: Johnson would like to know the inventory turnover ratio. You may tell Johnson to a. Divide cost of…

A: Inventory turnover ratio provide the number of times inventory comes and is sold in a year.

Q: The process of recording inventory that gives a lower cost of a commodity sold in an income…

A: The inventory can be valued using various methods as LIFO, FIFO and average method.

Q: The equation for Gross Profit is "Gross Profit = Revenues - Cost of Goods." Which of the following…

A: Gross income is direct income of a business generated from direct revenues of the company. It is an…

Q: Using the lower of cost or market, what should the total inventory value be for the following items:…

A: Value of inventory = Lower of Total cost price and Total market price

Q: Which one of the following statements is true? a. Under conditions of rising prices, the LIFO…

A: Step 1    Last in, first-out (LIFO) is inventory method in which the costs of the most recent…

Q: Complete the chart using the LIFO and FIFO costing methods, assuming a period of increasing costs:…

A: Answer)    Highest Amount  Lowest Amount Cost of Merchandise Sold  LIFO  FIFO…

Q: Which inventory costing method results in the lowest net income during a period of rising inventory…

A: In case of LIFO method, most of the cost of goods sold is calculated at the latest price since the…

Q: Which of the following statements about FIFO is true? Select one: a. All of the statements are…

A: FIFO is the First-in and First-out method of valuation of Inventory. Under this method, it is…

Q: Compared to using the weighted average cost method to account for inventory, during aperiod in which…

A: First-in-First-Out (FIFO):   In First-in-First-Out method, the costs of the initially purchased…

Q: Which of the following statements is true with regard to the gross profit ratio? An increase in…

A: Gross profit is an excess amount of revenue over its cost of goods sold.it measures profitability…

Q: 1. Which one of the following types of costs is most likely to be included in determining the cost…

A: Answer to the first question: The type of cost that is directly related to the cost of inventory is…

Q: A business uses a perpetual inventory system. During periods of rising prices, cost of goods sold…

A: In FIFO the earliest  goods ( beginning) will be sold first.

Q: Using the following data, how should the merchandise be valued under lower of cost or…

A: Lower of cost or market value: The lower-of-cost-or-market value is a method which requires the…

Q: Determine the value of the inventory at the lower of cost or market by applying lower of cost or…

A:

Q: In order to get the lowest profits possible in periods of rising inventory costs, the company should…

A: Inventory costing is an accounting concept that has direct consequence on company’s gross profit and…

Q: Which cost flow assumption generally results in the highest reported amount of net income when…

A: FIrst in first out or FIFO cost flow assumption provides highest net income when inventory prices…

Q: In a period of falling prices, the use of which inventory cost flow method would typically result in…

A: The inventory valuation is done at the end of the accounting period. Different techniques are…

Q: Gross profit will be​ the:   A. highest if LIFO is used and inventory costs are decreasing.   B.…

A: Inventory valuation can be done based on following methods: a) FIFO: FIFO (First-in, First-Out) is a…

Inventory Valuation

Before discussing the topic inventory valuation let’s discuss the meaning of inventory. In accounting, inventory is also known as stock. Inventory means all the finished goods, materials, merchandise that a business holds for the purpose of selling it in the market with the motive of earning profit.