Reading 36: Inventori LOSh 习题精选

UID: 164365
帖子: 3564
主题: 498
注册时间: 2010-4-13
最后登录: 2010-6-18

2^#

发表于 2010-4-19 22:38 | 只看该作者

In a period of rising prices, LIFO liquidation results in:

A)	increase in inventory.

B)	higher earnings.

C)	lower earnings.

Since older layers of inventory that are liquidated were purchased at lower prices, the cost of goods sold will be lower and earnings will be higher.

UID: 164365
帖子: 3564
主题: 498
注册时间: 2010-4-13
最后登录: 2010-6-18

3^#

发表于 2010-4-19 22:38 | 只看该作者

Which of the following is least likely to happen after a last in, first out (LIFO) liquidation in an environment of rising prices?

A)	Increase cost of goods sold (COGS).

B)	Increase gross income.

C)	Increase taxable income.

In a LIFO liquidation, a firm allows inventory to decrease so that it is using lower-cost materials (purchased in the past). This will lower the COGS and increase income and profit. This is one of the ways that a firm’s management can manipulate earnings.

UID: 164365
帖子: 3564
主题: 498
注册时间: 2010-4-13
最后登录: 2010-6-18

4^#

发表于 2010-4-19 22:39 | 只看该作者

In periods of falling prices, which of the following statements is TRUE? Compared to FIFO, LIFO results in:

A)	higher inventory balances and higher working capital.

B)	lower COGS, lower taxes and higher net income.

C)	higher inventory balances and lower working capital.

In periods of falling prices, LIFO results in lower COGS, higher taxes, higher net income, higher inventory balances, higher working capital, and lower cash flows compared to FIFO.

UID: 164365
帖子: 3564
主题: 498
注册时间: 2010-4-13
最后登录: 2010-6-18

5^#

发表于 2010-4-19 22:39 | 只看该作者

In case of a decline in LIFO reserve, to obtain a better analysis an analyst should:

A)	not make any adjustments.

B)	adjust the income statement, regardless of the reasons for the decline.

C)	adjust the income statement, only if such a decline is due to LIFO liquidation.

A decline in LIFO reserve is due to either falling prices or LIFO liquidations. In the case of LIFO liquidation, the income statement does not reflect the current costs and should be adjusted. In the case of falling prices, the LIFO income statement amounts are current and do not need adjustment.

UID: 164365
帖子: 3564
主题: 498
注册时间: 2010-4-13
最后登录: 2010-6-18

6^#

发表于 2010-4-19 22:39 | 只看该作者

LIFO liquidation may result when:

A)	purchases are less than goods sold.

B)	purchases are more than goods sold.

C)	cost of goods sold is less than the available inventory.

For LIFO companies, when more goods are sold than are purchased during a period, the goods held in opening inventory are in included in COGS. This will result in LIFO liquidation.

UID: 164365
帖子: 3564
主题: 498
注册时间: 2010-4-13
最后登录: 2010-6-18

7^#

发表于 2010-4-19 22:40 | 只看该作者

Pischke Motors provided you with the following financials:

Beginning LIFO reserve $2,484.
Cost of goods sold (COGS) using LIFO $3,988.
COGS using FIFO $2,004.

What is the ending LIFO reserve?

$4,468.

$1,984.

$500.

Ending LIFO reserve = (LIFO COGS ? FIFO COGS) + Beginning LIFO reserve
= ($3,988 ? $2,004) + $2,484
= $4,468

UID: 164365
帖子: 3564
主题: 498
注册时间: 2010-4-13
最后登录: 2010-6-18

8^#

发表于 2010-4-19 22:40 | 只看该作者

Under last in first out (LIFO) accounting during periods of inflation, when a firm sells a greater quantity of its inventory than it produces or acquires, the result is:

A)	an increase in the LIFO reserve.

B)	an understatement of the cost of goods sold (COGS).

C)	lower earnings.

This is a LIFO liquidation which refers to a declining inventory balance (the units available for sale are declining). In this case the prices for goods that are being sold are no longer recent prices and can be many years out of date. This would make COGS appear to be very low and gross and net profits to be artificially high.

tracylaubb

CFA New Member

Rank: 1

UID: 203369
帖子: 56
主题: 0
注册时间: 2011-2-13
最后登录: 2011-4-25

9^#

发表于 2011-2-13 22:05 | 只看该作者

Thx