Suppose Interest Rates Have Been at Historically Low Levels the Past

question 149

Multiple Choice

Suppose interest rates have been at historically low levels the past two years.A reasonable strategy for bond investors during this time period would be to

• A) invest in long-term bonds to reduce interest rate risk.
• B) invest in short-term bonds to reduce interest rate risk.
• C) buy only junk bonds which have higher interest rates.
• D) invest in long-term bonds to lock in a bond position for when interest rates increase in the future.

Distinguish between various types of inventory and expenses accounts and their impacts on financial statements.

Understand the implications of inventory systems under GAAP and IFRS.

Calculate and interpret the gross profit rate.

Comprehend the roles of Freight-in, sales returns and allowances, and purchase discounts on inventory costing.

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Definitions:

Ending Inventory

The value of goods available for sale at the end of an accounting period, calculated before any adjustments for cost of sales.

Perpetual Inventory System

A bookkeeping approach that instantly logs the sale or acquisition of stock using computerized point-of-sale systems and enterprise asset management programs.

FIFO

FIFO, or First-In, First-Out, is an inventory valuation method where goods produced or acquired first are sold, used, or disposed of first.

Ending Inventory

The full value of articles ready to be sold at the conclusion of an accounting duration.