7774

答案和详解如下：

Question 61 

The correct answer was B) Higher under LIFO  Lower under LIFO  In a deflationary environment, a LIFO firm will report lower COGS since prices are falling and the most recent prices are used to calculate COGS. Lower COGS will result in higher profitability and higher equity (the latter in the form of higher retained earnings).  

This question tested from Session 10, Reading 43, LOS d

 

Question 62 

The correct answer was D) higher income taxes than under first in, first out (FIFO). 

LIFO, under rising prices, results in lower net income for both accounting and tax purposes, so income taxes are lower under LIFO than under FIFO. LIFO will also result in lower working capital (current assets – current liabilities) due to the lower value of inventory carried on the balance sheet. 

This question tested from Session 9, Reading 35, LOS c, (Part 2)

 

Question 63 

The correct answer was C) $80,000        $130,000

EI = BI + P - COGS

100 = 110 + P - 90

P = $80,000

In order to convert ending inventory under FIFO to LIFO you have to add the LIFO reserve to the ending inventory under LIFO. EI_FIFO = $100,000 + $30,000 = $130,000

This question tested from Session 9, Reading 35, LOS a

 

Question 64 

The correct answer was B) 

Premium payments on life insurance of key employees is an expense on the financial statements, but is not deducted on tax returns. Proceeds from life insurance and tax exempt interest are both non-taxable, but are recognized as revenue on the financial statements. These three items result in permanent differences between pretax income and taxable income. 

This question tested from Session 9, Reading 38, LOS e

 

Question 65 

The correct answer was B) gross cash receipts and payments  the same under both methods  

The primary advantage of the direct method is that it presents the firm’s gross operating cash receipts and payments; the indirect method only presents the net result of the receipts and payments. Total cash flow from operating activities is exactly the same under both methods; only the presentation differs. 

This question tested from Session 8, Reading 34, LOS d, (Part 1)