答案和详解如下： 11.The Orchard Supply Company uses LIFO inventory valuation. Orchard Supply had a cost of goods sold of $1 million for the period. The inventory at the beginning of the period was $0.5 million and the inventory at the end of the period was $0.6. Orchard Supply's LIFO reserve was $0.1 million at the end of the previous year and $0.2 at the end of the current year. What is Orchard Supply's cost of goods sold according to FIFO inventory valuation? A) $0.8 million. B) $1.0 million. C) $1.1 million. D) $0.9 million. The correct answer was D) FIFO COGS = LIFO COGS - change in LIFO reserve FIFO COGS = $1 million - $0.1 million = $0.9 million
12.During periods of decreasing prices, what type of inventory accounting method should a firm use to report higher net income? The company should use: A) FIFO because during periods of decreasing prices, the COGS will be lower, resulting in a higher net income. B) FIFO because during periods of decreasing prices, the COGS will be higher, resulting in a higher net income. C) LIFO because during periods of decreasing prices, the COGS will be higher, resulting in a higher net income. D) LIFO because during periods of decreasing prices, the COGS will be lower, resulting in a higher net income. The correct answer was D) In periods of falling prices, LIFO results in lower COGS, and therefore higher net income than FIFO, because LIFO assumes the most recently purchased (lower cost) goods are sold first.
13.In the following equation: FIFO inventory = LIFO inventory + LIFO reserve, the LIFO reserve is used to convert the LIFO inventory to a comparable FIFO inventory because the LIFO inventory is: A) understated representing unrecognized losses and deferred taxes. B) overstated representing unrecognized profits and deferred taxes. C) understated representing unrecognized profits and deferred taxes. D) understated representing unrecognized profits and deferred liabilities. The correct answer was C) LIFO reserve represents profits not recognized and taxes not paid (because COGS is higher and net profit is lower under LIFO).
14.If a firm has a FIFO inventory of 9,000 and a LIFO inventory of 6,500, what is the value of the LIFO reserve assuming a 40 percent tax rate? A) $2,500. B) $1,500. C) $1,000 D) $1,600. The correct answer was A) LIFO reserve = FIFO inventory – LIFO inventory = 9,000 – 6,500 = 2,500
15.Given the following inventory information about the Buckner Company:
Year-end LIFO inventory of $6,500.
Year-end LIFO reserve of $2,500.
The current year's LIFO cost of goods sold is $15,000.
After tax income is $1,600.
The previous year's LIFO reserve was $2,000. What is the firm's after tax net income on a FIFO basis if the firm's tax rate is 40 percent? A) $2,100. B) $1,300. C) $3,400. D) $1,900. The correct answer was D) FIFO net income = LIFO net income + (change in LIFO res.)(1 - t) 1600 + [(2,500 - 2,000)(1 – 0.4)] = $1,900 | 
发表于 2008-4-14 10:53
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