62 which one of the following sets of inventory cost flow assumptions is not suscept 4313877

62 which one of the following sets of inventory cost flow assumptions is not suscept 4313877

62.Which one of the following sets of inventory cost flow assumptions is not susceptible to profit manipulation by management?

a.

FIFO and specific identification

b.

LIFO and average cost

c.

FIFO and average cost

d.

LIFO and specific identification

63.For the year in which prices rise, adoption of a “just-in-time” inventory system will most likely result in

a.

a permanent increase in the size of the inventory

b.

a reduction in income taxes

c.

an increase in total assets

d.

an increase in income

64.Which one of the following is not an advantage of using the FIFO cost flow assumption?

a.

produces lowest net income in periods of rising prices

b.

provides a relevant ending inventory value

c.

is not as susceptible to profit manipulation by management

d.

does not produce unusual results when inventory liquidation occurs

65.Which one of the following is an advantage of LIFO?

a.

In periods of rising prices, less income tax is paid.

b.

In periods of rising prices, more holding gains are reported in net income.

c.

Record keeping and financial statement preparation are easier.

d.

Conservative income statements and balance sheet disclosures result from falling prices.

66.Which one of the following cost flow assumptions provides the lowest inventory value in periods of rising prices?

a.

FIFO periodic

b.

LIFO periodic

c.

FIFO perpetual

d.

moving average

67.Taylor Company changed its inventory cost flow assumption from FIFO to LIFO in a period of rising prices. What would be the effect of this changeon ending inventory in the year of the change?

a.

increased ending inventory

b.

decreased ending inventory

c.

no change in ending inventory

d.

cannot be determined from the information given

68.Which one of the following statements is true?

a.

Income manipulation is difficult under LIFO.

b.

Accounting principles do not require that the inventory cost flow approximate the physical flow of goods.

c.

Companies may use LIFO for tax purposes and FIFO in the financial statements.

d.

In periods of declining prices, LIFO will result in the payment of lower income taxes.

69.Which one of the following is not an advantage of LIFO?

a.

In periods of rising prices, less income tax is paid.

b.

In periods of rising prices, less holding gains are reported in net income.

c.

Record keeping and financial statement preparation are easier.

d.

Conservative income statements and balance sheet disclosures result from rising prices.

70.Which of the following is not a disadvantage of using the FIFO cost flow assumption?

a.

creates the highest outflow for income taxes during periods of rising prices

b.

does not match current costs against current revenues

c.

includes all the holding gains in income during periods of rising prices

d.

provides a relevant ending inventory value

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