Reading 35: Analysis of Inventories - LOS d ～ Q6-10

答案和详解如下：

6.First in, first out (FIFO) provides the more useful estimate of inventory and balance sheet information. When analyzing a company using LIFO, a restatement of the inventory account (using the LIFO reserve) is required. Which of the following accounts will NOT require restatement following the restatement of the inventory account?

A)   Total assets.

B)   Current liabilities.

C)   Current assets.

D)   Shareholder’s equity.

The correct answer was A)

The restatement of inventories will cause a restatement of current assets and total assets. To keep the balance sheet in balance, the shareholder’s equity account must also be restated.

7.In general, when analyzing profitability and costs, or when analyzing asset and equity ratios, which of the following should be used?

A)                                        LIFO     FIFO

B)                                        FIFO     LIFO

C)                                        FIFO     FIFO

D)                                        LIFO     LIFO

The correct answer was A)

In general, an analyst should use LIFO when examining profitability or cost ratios and FIFO when examining asset or equity ratios.

8.What are the earnings before taxes using the FIFO method and LIFO method?

A)                                        $6,900   $5,676

B)                                        $6,900   $5,506

C)                                        $6,213   $5,676

D)                                        $6,213   $5,506

The correct answer was A)

FIFO COGS =

(709 units)($2/unit) + (959 - 709)($6/unit) = $1,418 + $1,500 = $2,918

Sales = (959 units)($13/unit) = $12,467

EBIT = Sales - COGS - Expenses

= 12,467 - 2,918 - 2,649 = $6,900

LIFO COGS =

(556 units)($6/unit) + (959 - 556)($2/unit) = $3,336 + $806 = $4,142

Sales = (959 units)($13/unit) = $12,467

EBIT = Sales - COGS - Expenses

= 12,467 - 4,142 - 2,649 = $5,676

9.An analyst acquires the following information regarding a company:

What are the earnings before taxes using the FIFO Method and the LIFO Method?

A)                                        $7,525   $5,541

B)                                        $7,525   $5,818

C)                                        $6,700   $5,818

D)                                        $6,700   $5,541

The correct answer was A)

FIFO: EBT = SALES - (COGS + SGA) = 12,720 - (2,004 + 3,191) = $7,525.00.

LIFO: EBT = SALES - (COGS + SGA) = 12,720 - (3,988 + 3,191) = $5,541.00.

10.Given the following information and assuming beginning inventory was zero what is the gross profit at the end of the period using the FIFO, LIFO, and average cost methods?

A)                                         $650                                 $750       $990

B)                                         $650                                 $750       $677

C)                                         $677                                 $650       $677

D)                                         $677                                 $650       $990

The correct answer was B)

FIFO 5,450 - 4,800 = $650

LIFO: $5,450 - $4,700 = $750

Cost Average: $5,450 – $4,773.21 = $676.79