答案和详解如下： Q1. Assuming high inflation in the short run and lower levels of inflation in the long run, the current ratio of a company using last in, first out (LIFO) relative to a firm using first in, first out (FIFO), will be: A) lower, and the difference between the two firms' current ratios will decrease as inflation decreases. B) lower, and the difference between the two firms' current ratios will increase as inflation decreases. C) higher, and the difference between the two firms' current ratios will decrease as inflation decreases. Correct answer is B) The LIFO firm's current ratio will be lower and the difference between the two firms' current ratios will increase as inflation decreases. For example, assume purchases equal sales so the quantity of inventory is constant. Inventory value under LIFO will also remain constant as inflation decreases, whereas FIFO inventory value will increase even as the inflation rate decreases. As long as inflation remains positive, the FIFO inventory value and the difference between LIFO and FIFO inventory values will increase, as will the difference between the LIFO and FIFO firms' current ratios. Units | Unit Price | | Beginning Inventory | 709 | $2.00 | Purchases | 556 | $6.00 | Sales | 959 | $13.00 | SGA Expenses | $2,649 per annum |
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Q2. What are the earnings before taxes using the FIFO method and LIFO method? FIFO LIFO
A) $6,900 $5,676 B) $6,900 $5,506 C) $6,213 $5,676 Correct answer is 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 Q3. In general, when analyzing profitability and costs, or when analyzing asset and equity ratios, which of the following should be used? Profitability/Cost Ratios Asset/Equity Ratios
A) FIFO FIFO B) LIFO FIFO C) FIFO LIFO Correct answer is B) In general, an analyst should use LIFO when examining profitability or cost ratios and FIFO when examining asset or equity ratios. Q4. 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) Shareholder’s equity. Correct answer is B) 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. Q5. When analyzing profitability ratios, which inventory accounting method is preferred? A) Weighted average. B) First in, first out (FIFO). C) Last in, first out (LIFO). Correct answer is C) Using LIFO cost of goods sold (COGS) gives a more accurate measure of future earnings because the LIFO COGS is more representative of the current cost of product sold as compared to using FIFO therefore net income will be more accurately represented. | 
发表于 2009-1-19 09:39
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