答案和详解如下：
1.Which accounting methods are preferable for income statements and balance sheets? A) LIFO for the balance sheet and FIFO for the income statement. B) LIFO for both income statements and balance sheets. C) LIFO for income statements and FIFO for the balance sheet. D) FIFO for both income statements and balance sheets. The correct answer was C) LIFO allocates the most recent prices to the cost of goods sold and provides a better measure of current income. For balance sheet purposes, inventories based on FIFO are preferable since these values most closely resemble current cost and economic value.
2.Which of the following statements is least accurate?
A) In a period of rising prices, LIFO gives the best COGS, whereas FIFO gives the best inventory balance on the balance sheet. B) In a period of stable prices, LIFO and FIFO will produce similar account balances. C) In a period of rising prices, FIFO gives the best COGS, whereas LIFO gives the best inventory balance on the balance sheet. D) LIFO produces a tax benefit in a period of rising prices, therefore results in higher cash flows than FIFO. The correct answer was C) If prices are rising steadily, FIFO inventory is valued at the more recent purchase prices which are higher and provide a better estimate of the replacement value of the inventory. LIFO costing will produce a cost of goods sold much closer to replacement cost which provides a better estimate than using FIFO.
3.If all else holds constant in periods of rising prices and inventory levels: A) FIFO firms have higher debt to equity ratios than LIFO firms do. B) FIFO firms will have greater stockholder's equity than LIFO firms do. C) LIFO firms have higher gross profit margins than FIFO firms do. D) LIFO firms will have greater current asset balances than FIFO firms do. The correct answer was B) The FIFO method of inventory accounting assigns the cost of the earliest units acquired to goods transferred out and the cost of most recent acquisitions to ending inventory. When prices are rising, the cheaper goods in beginning inventory reflecting earlier purchases are assigned to COGS (hence, higher income and higher shareholder's equity through retained earnings.) Explanations for other choices: In periods of rising prices and inventory levels (all else constant): FIFO firms have lower debt to equity ratios than LIFO firms do because stockholder's equity is higher and debt is constant. LIFO firms have lower gross profit margins ((Sales-COGS)/Sales) because the more expensive last purchases are assigned to COGS, lowering the numerator. LIFO firms will have lower current asset balances than FIFO firms do because the cheaper units in beginning inventory and earlier purchases are assigned to ending inventory (a component of current assets).
4.Which of the following statements regarding the different inventory methods is FALSE? A) The weighted average method is not sensitive to price changes. B) FIFO is preferable for tax purposes when prices are falling. C) FIFO is more accurate for income statement purposes. D) Cash flow under FIFO is equal the cash flow under LIFO when prices are not changing. The correct answer was C) LIFO is more accurate for income statement purposes because LIFO's COGS more closely reflects current costs and therefore provides a better measure of current income.
5.For balance sheet purposes, inventories based on: A) LIFO are preferable to those based on FIFO, as they more closely reflect the current costs. B) weighted average are preferable to those based on FIFO, as they more closely reflect the current costs. C) FIFO are preferable to those based on LIFO, as they more closely reflect current costs. D) LIFO are preferable to those based on average cost, as they more closely reflect the current costs. The correct answer was C) The inventories based on FIFO are preferable to those presented under LIFO or average cost for balance sheet purposes. Under FIFO, the older inventories are taken out first, and the ending inventory balance consists of the recent purchases and thus most closely reflect the current (economic) value. | 
发表于 2008-4-14 10:46
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