For Each of the Following Statements, Determine Which Method of Inventory

question 24

Essay

For each of the following statements, determine which method of inventory valuation (FIFO or LIFO) it depicts.
1. ___________________ The item sold is assigned a cost.
2. ___________________ The ending inventory is higher under this method when costs are rising.
3. ___________________ The cost of goods sold is higher under this method when costs are rising.
4. ___________________ When prices are rising, this method results in higher net income.
5. ___________________ If this method is used for federal tax purposes, it must also be adopted for it financial accounting.
6. ___________________ This method is not accepted in some countries.
7. ___________________ When prices are rising, the average cost method will result in an ending inventory that is higher than which method?

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Definitions:

Dividends

Payments made by a corporation to its shareholders, usually derived from the company's profits, as a reward for investing in the company's equity.

Capital Gains

Capital Gains are the profits realized from the sale of assets such as stocks, bonds, or real estate, which exceed the purchase costs.

Stock Split

A corporate action that increases the number of shares outstanding by issuing more shares to current shareholders.

Market Price

The present price for which a service or asset is available for purchase or sale in a market.