All categories

2 years ago

Which cost flow assumption generally results in the highest reported amount of net income in periods of rising inventory costs?.

1 answer:

4 0

FIFO is cost flow assumption that generally results in the highest reported amount of net income in periods of rising inventory costs.

<h3>What is First In, First Out?</h3>

First In, First Out, can be regarded as the is an asset-management techniques which is been used in analyzing assets.

With this techniques the asset that is usually disposed first are those that are first gotten, and this is usually done for the purpose of tax, and uses the assumption that there inclusion of old items in income statement.

learn more about FIFO at :brainly.com/question/24137318

#SPJ1

You might be interested in

A loss from the disposal of a significant component of a business should be reported separately in the income statement: after i

wlad13 [49]

<u>Answer:</u> Option 1 After income from continuing operations.

<u>Explanation:</u>

A disposal account shows the profit or loss from the sale of any asset. When the sale price is higher than the book value of the component then it is a gain. When the sale price is less than book value then it is a loss.

Loss from the sale of component will reduce the income of the business. When there is a loss it is debited in the income statement. This appears below the operations income and it is deducted from the revenue to show the actual value of the revenue.

8 0

4 years ago

Michael’s Bakery had $236,400 in net fixed assets at the beginning of the year. During the year, the company purchased $53,200 i

alexdok [17]

Answer:

$270,300

Explanation:

Given that,

Net fixed assets at the beginning of the year = $236,400

New equipment purchased = $53,200

Old equipment sold = $22,000

Book value of old equipment = $5,900

Depreciation expense for the year = $13,400

The value of new equipment purchased added to the fixed assets, the book value of the old equipment and the depreciation expense are deducted from the fixed assets.

The sale of old equipment and depreciation expense reduces the net fixed assets, that's why it is deducted from the net fixed assets.

Net fixed assets at the end of the year:

= Beginning net fixed assets + Value of new equipment - Book value of the old equipment sold - Depreciation expense

= $236,400 + $53,200 - $5,900 - $13,400

= $270,300

6 0

3 years ago

In its first month of operations, Vaughn Manufacturing made three purchases of merchandise in the following sequence:

olga nikolaevna [1]

Answer:

$Ending\ Inventory = \$1920$ --- FIFO

$Ending\ Inventory = \$1200$ -- LIFO

Explanation:

Solving (a):

FIFO method

This means that the first items to be listed were sold out and only 240 of the last item is left

This implies that the following units were sold

340 units at $5; 440 units at $7 and (540 - 240) units at $8

So: We're left with

$Ending\ Inventory = 240 * \$8$

$Ending\ Inventory = \$1920$

Solving (b):

LIFO method

This means that the last items to be listed were sold out and only 240 of the fist item is left

This implies that the following units were sold

540 units at $8; 440 units at $7 and (340 - 240) units at $5

So: We're left with

$Ending\ Inventory = 240 * \$5$

$Ending\ Inventory = \$1200$

3 0

4 years ago

What does the balance on payables control and receivables control account represent

shtirl [24]

<u>Explanation:</u>

Payables control accounts helps to maintain each supplier account as a separate subsidiary ledger and reducing the amount of postings in the general ledger. Receivables control account is useful to maintain the credit sales through separate subsidiary ledger.

When there is a control account then the the trial balance of the firm can be easily prepared by seeing the general ledger.

Book keeping errors can also be identified by reconciling the balance on accounts payable and general ledger accounts.

3 0

3 years ago

Fergie has the choice between investing in a State of New York bond at 5.9 percent and a Surething Inc. bond at 9.4 percent. Ass

choli [55]

Answer:

the interest rate that the state of New York bond need to offer to make Fergie indifferent is 6.58%

Explanation:

After tax returning surething bond = 9.4%*(1-30) = 6.58%

when New York bond offers 6.58%,Fergie will be indifferent between investing in the two bonds

Therefore, the interest rate that the state of New York bond need to offer to make Fergie indifferent is 6.58%

6 0

3 years ago