Q1. Premier Corp.’s year-end last in, first out (LIFO) reserve was $2,500,000 in 2000 and $2,300,000 in 2001. Premier’s $200,000 decline in the LIFO reserve could be explained by each of the following EXCEPT:
A) the LIFO reserve was being amortized. B) a LIFO liquidation occurred. C) declining inventory prices.
Q2. In a period of rising prices, LIFO liquidation results in: A) increase in inventory. B) higher earnings. C) lower earnings.
Q3. Which of the following is least likely to happen after a last in, first out (LIFO) liquidation in an environment of rising prices? A) Increase gross income. B) Increase cost of goods sold (COGS). C) Increase taxable income.
Q4. In periods of falling prices, which of the following statements is TRUE? Compared to FIFO, LIFO results in: A) higher inventory balances and higher working capital. B) lower COGS, lower taxes and higher net income. C) higher inventory balances and lower working capital.
Q5. In case of a decline in LIFO reserve, to obtain a better analysis an analyst should: A) not make any adjustments. B) adjust the income statement, regardless of the reasons for the decline. C) adjust the income statement, only if such a decline is due to LIFO liquidation.
Q6. LIFO liquidation may result when: A) purchases are less than goods sold. B) purchases are more than goods sold. C) cost of goods sold is less than the available inventory.
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发表于 2009-1-19 10:02
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