Butler Products Decided to Change Inventory Methods on January 1

question 62

Multiple Choice

Butler Products decided to change inventory methods on January 1, 2020 to more effectively report its results of operations. In the past, management has measured its ending inventories by the average-cost method and they now believe that FIFO is a better representation of its financial position and profitability. Butler's tax rate is 35% for all years. $$\begin{array} { r c c } \underline{\text { Year Ended} } & \underline{ \text { FIFO Inventory} } & \underline{\text { Average-Cost Inventory }} \\\text { December 31, 2018 } & \$ 264,000 & 205,000 \\\text { December 31, 2019 } & 395,000 & 345,000 \\\text { December 31,2020 } & 240,000 & 190,000\end{array}$$
Which one of the following journal entries correctly records the change in the accounting principle?

Understand the concepts and strategies of market segmentation.

Identify different market segmentation types including geographic, demographic, psychographic, and behavioral segmentation.

Explain the process and importance of targeting in marketing strategies.

Understand the concept and components of a value proposition.

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Definitions:

Percentage

A fraction or ratio expressed as a part of 100.

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term obligations with its current assets over its current liabilities.

Current Assets

Current assets are assets that a company expects to convert into cash, sell, or consume within one year or within its operating cycle if longer than a year.

Vertical Analysis

A financial analysis method that compares various line items in a company's financial statements over a single period, expressing each item as a percentage of a base amount to assess relative size and structure.