Barker Company Paid Cash to Purchase Two Identical Inventory Items

question 2

Multiple Choice

Barker Company paid cash to purchase two identical inventory items.The first purchase cost $18.00 cash and the second cost $20.00 cash.Barker sold one inventory item for $30.00 cash.Based on this information alone,without considering the effect of income tax,:

• A)cash flow from operating activities is $11.00 assuming a weighted average cost flow.
• B)cash flow from operating activities is $12.00 assuming a FIFO cost flow.
• C)cash flow from operating activities is $10.00 assuming a LIFO cost flow.
• D)the amount of cash flow from operating activities is not affected by the cost flow method.

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Definitions:

Elastic Demand

A condition in which the quantity demanded of a good or service greatly changes in response to changes in its price.

Inelastic Supply

A situation where the quantity of a good supplied by producers is relatively insensitive to changes in its price.

Tax Burden

The total amount of taxes that individuals or businesses are required to pay to government entities, often expressed as a percentage of income or profit.

Elasticity

A measure in economics to show how the quantity demanded or supplied of a good or service responds to a change in price.