Q1. In periods of rising prices and stable or increasing inventory quantities, using the LIFO method for inventory accounting compared to FIFO will have: A) higher COGS, lower income, lower cash flows, and lower inventory. B) higher COGS, lower income, higher cash flows, and lower inventory. C) lower COGS, higher income, identical cash flows, and lower inventory.
Q2. Assume that Hunter Round Restaurant Supply currently uses the last in, first out (LIFO) method to account for inventory and that the business environment is one of rising prices and stable or growing inventory balances. In addition, Hunter Round has an effective tax rate of zero percent due to tax loss carrybacks. All else equal, which of the following statements is least likely valid? By using LIFO instead of first in, first out (FIFO), Hunter Round has: A) higher cash flows. B) lower net income. C) lower working capital.
Q3. In periods of rising prices and stable or increasing inventory quantities, a company using LIFO rather than FIFO will report cost of goods sold and cash flows which are, respectively: COGS Cash Flows
A) Lower Lower B) Higher Lower C) Higher Higher
Q4. During periods of rising prices, which of the following is most likely to occur? A) LIFO COGS > FIFO COGS, therefore LIFO net income > FIFO net income. B) LIFO COGS < FIFO COGS, therefore LIFO net income < FIFO net income. C) LIFO COGS > FIFO COGS, therefore LIFO net income < FIFO net income.
Q5. In a period of rising prices and stable or increasing inventory quantities, use of the first in, first out (FIFO) inventory cost flow assumption results in all of the following EXCEPT:
A) higher earnings after taxes than under last in, first out (LIFO). B) higher earnings before taxes than under last in, first out (LIFO). C) lower inventory balances than under last in, first out (LIFO).
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发表于 2009-1-19 09:37
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