答案和详解如下： 6.A last in, first out (LIFO) liquidation in an environment of rising prices will NOT do which of the following? A) Increase gross income. B) Increase taxable income. C) Increase cost of goods sold (COGS). D) Reduce inventory value. The correct answer was C) 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, profit, and taxes. This is one of the ways that a firm’s management can manipulate earnings.
7.In a period of rising prices, LIFO liquidation results in: A) lower earnings. B) increase in inventory. C) increase in accounts receivable. D) higher earnings. The correct answer was D) 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.
8.Premier Corp.’s year-end last in, first out (LIFO) reserve was $2,500,000 in 2000 and $2,300,000 in 2001. Premier’s $200,000 decline in the LIFO reserve could be explained by each of the following EXCEPT: A) declining inventory prices. B) a LIFO liquidation occurred. C) the LIFO reserve was being amortized. D) inventory used exceeded purchases. The correct answer was C) A decline in the LIFO reserve occurs when the increasing prices that created the reserve begin declining or when the inventory is liquidated (i.e. less units in inventory at the end of the year than at the beginning). LIFO reserves are not amortized. | 
发表于 2008-4-14 12:22
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