答案和详解如下： 1.Selected information from Oldtown, Inc.’s financial statements for the year ended December 31, 2004 included the following (in $): Cash | 1,320,000 | | Accounts Payable | 1,620,000 | Accounts Receivable | 2,430,000 | | Deferred Tax Liability | 715,000 | Inventory | 6,710,000 | | Long-term Debt | 15,230,000 | Property, Plant & Equip. | 12,470,000 | | Common Stock | 1,000,000 | Total Assets | 22,930,000 | | Retained Earnings | 4,365,000 | | | | Total Liabilities & Equity | 22,930,000 | Sales | 15,000,000 | | | | Net Income | 3,000,000 | | | | LIFO Reserve at Jan. 1 | 1,620,000 | | | | LIFO Reserve at Dec. 31 | 1,620,000 | | | |
Oldtown uses the last in, first out (LIFO) inventory cost flow assumption. The tax rate was 40 percent. If Oldtown changed from LIFO to first in, first out (FIFO) for 2004, net profit margin would: A) decrease from 20.0 to 13.5 percent. B) decrease from 20.0 to 9.2 percent. C) decrease from 20.0 to 16.8 percent. D) remain unchanged at 20.0 percent. The correct answer was D) Net profit margin under LIFO (net income / net sales) was ($3,000,000 / $15,000,000 =) 20.0 percent. Under FIFO, net income does not change in 2004 because there was no change in the LIFO reserve balance, and no adjustment of net income is made.
2.An analyst acquires the following information regarding a company:
| Units | Unit Price | Beginning Inventory | 559 | $1.00 | Purchases | 785 | $5.00 | Sales | 848 | $15.00 | SGA Expenses | $3,191 per annum |
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What are the Earnings Before taxes using the Weighted Average Method? A) $6,498.82. B) $7,525.00. C) $5,541.00. D) $6,699.81. The correct answer was D) EBT = SALES - (COGS + SGA) = 12,720 - (2,829.19 + 3,191) = $6,699.81.
| 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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3.What are the Earnings Before taxes using the Weighted Average Method? A) $6,213.98. B) $6,027.56. C) $5,676.00. D) $6,900.00. The correct answer was A) Weighted average COGS = weighted average cost per unit =(709 units)($2/unit) + (556 units)($6/unit) = $4,754/1,265units = $3.7581 weighted average COGS = ($3.7581)(959 units) = $3,604.02 Sales = (959 units)($13/unit) = $12,467 EBIT = Sales - COGS - Expenses = 12,467 - 3,604.02 - 2,649 = $6,213.98
4.The best way to compute an inventory turnover ratio is to use: A) LIFO for COGS and FIFO for average inventory. B) FIFO for both COGS and average inventory. C) LIFO for both COGS and average inventory. D) FIFO for COGS and LIFO for average inventory. The correct answer was A) Inventory turnover makes no sense at all for firms using LIFO due to the mismatching of costs (the numerator is current while the denominator is historical). FIFO based inventory is relatively unaffected by price changes and is a good approximation of actual turnover. In this way, current costs are matched in the numerator and denominator.
5.When analyzing profitability ratios, which inventory accounting method is preferred? A) LIFO. B) FIFO. C) Weighted average. D) Profitability ratios are not affected by the inventory accounting method used. The correct answer was A) Using LIFO 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.
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发表于 2008-4-14 11:09
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