答案和详解如下： Q10. Selected information from Jenner, Inc.’s financial statements for the year ended December 31 included the following (in $): Cash | $200,000 | Accounts Payable | $300,000 | Accounts Receivable | 300,000 | Deferred Tax Liability | 600,000 | Inventory | 1,500,000 | Long-term Debt | 8,100,000 | Property, Plant & Equip. | 11,000,000 | Common Stock | 2,200,000 | Total Assets | 13,000,000 | Retained Earnings | 1,800,000 | LIFO Reserve at Jan. 1 | 400,000 | Total Liabilities & Equity | $13,000,000 | LIFO Reserve at Dec. 31 | 600,000 |
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| Net Income |
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| (after 40% tax rate) | 800,000 |
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Jenner uses the last in, first out (LIFO) inventory cost flow assumption. If Jenner changed from LIFO to first in, first out (FIFO) in 2001, return on total equity would: A) increase from 20.0 to 21.1%. B) increase from 20.0 to 23.0%. C) decrease from 20.0 to 18.3%. Correct answer is A)
Return on total equity (net income / total equity) was ($800,000 / ($2,200,000 + $1,800,000) =) 20%. Under FIFO, net income increases by the increase in the LIFO reserve multiplied by (1 – tax rate). FIFO net income for 2001 was ($800,000 + ($600,000 – $400,000) (1 – 0.40) = ) $920,000. Total equity increases by the amount of accumulated FIFO profits that are added to retained earnings which is calculated by multiplying the amount of the ending LIFO reserve by (1 – tax rate) for an increase of (($600,000) * (1 – 0.40) =) $360,000. Total equity is ($2,200,000 + $1,800,000 + $360,000 =) $4,360,000. FIFO return on total equity is ($920,000 / $4,360,000 =) 21.1%. Q11. Given the following information and assuming beginning inventory was zero what is the gross profit at the end of the period using the FIFO, LIFO, and average cost methods? Purchases | Sales | 20 units at $50 | 15 units at $60 | 35 units at $40 | 35 units at $45 | 85 units at $30 | 85 units at $35 |
FIFO LIFO Cost Average
A) $650 $750 $990 B) $677 $650 $677 C)
$650 $750 $677 Correct answer is C) FIFO: $5,450 − 4,800 = $650 LIFO: $5,450 − $4,700 = $750 Cost Average: $5,450 − $4,773.21 = $676.79 Q12. During periods of decreasing prices, a firm will report higher net income if its inventory cost assumption is: A) FIFO because during periods of decreasing prices, COGS will be higher, resulting in a higher net income. B) FIFO because during periods of decreasing prices, COGS will be lower, resulting in a higher net income. C) LIFO because during periods of decreasing prices, COGS will be lower, resulting in a higher net income. Correct answer is C) In periods of falling prices, LIFO results in lower COGS, and therefore higher net income than FIFO, because LIFO assumes the most recently purchased (lower cost) goods are sold first. Q13.Which of the following statements regarding inventory accounting methods is most accurate? In periods of: A) declining prices FIFO results in higher net income than LIFO. B) rising prices and stable unit purchases, using the FIFO method results in higher inventory turnover than the LIFO method. C) rising prices and stable unit purchases, using the LIFO method results in a lower current ratio than the FIFO method. Correct answer is C) In periods of rising prices LIFO results in lower current assets because the ending inventory is based on inventory items that were purchased first at a lower price. Q14. During periods of rising prices: A) LIFO Gross Profit Margin > FIFO Gross Profit Margin. B) LIFO Inventory Turnover < FIFO Inventory Turnover. C) LIFO Debt to Equity Ratio > FIFO Debt to Equity Ratio. Correct answer is C) FIFO inventory, and therefore FIFO assets and equity, will be higher by the LIFO reserve. | 
发表于 2009-1-19 09:48
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