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katrin [286]
3 years ago
15

When inventories go down in value, accountants adjust the value of the inventory that is recorded on the balance sheet. Sometime

s inventory goes up in value. Do accountant's ever adjust the value of inventory upwards? What are the general guidelines that accountant's follow in recording inventory value?
Business
1 answer:
Ilia_Sergeevich [38]3 years ago
4 0

Answer:

Accountants do not adjust the value of inventory upwards.  The general guidelines in recording inventory value are to recognize the ending inventory value at the lower of cost or market value and to ensure that transactions are recorded in accordance with the conservatism principle of generally accepted accounting principles.

Explanation:

The conservatism principle requires that all probable losses are recognized as soon as they can be reasonably estimated, while gains should be recognized only when they are fully realized.  The lower of cost or market value (LCM) method states that inventory should be recorded at the lower of either the historical cost or the market value.  The LCM is in line with the conservatism principle.

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High-Low Method
svlad2 [7]

Answer:

Variable cost per unit= $50

Fixed costs= $900,000

Explanation:

Giving the following information:

Total Costs Units Produced

January $1,900,000 20,000 units

February 2,250,000 27,000

March 2,400,000 30,000

<u>To calculate the unitary variable cost and the fixed cost under the high-low method, we need to use the following formulas:</u>

<u></u>

Variable cost per unit= (Highest activity cost - Lowest activity cost)/ (Highest activity units - Lowest activity units)

Variable cost per unit= (2,400,000 - 1,900,000) / (30,000 - 20,000)

Variable cost per unit= $50

Fixed costs= Highest activity cost - (Variable cost per unit * HAU)

Fixed costs= 2,400,000 - (50*30,000)

Fixed costs= $900,000

Fixed costs= LAC - (Variable cost per unit* LAU)

Fixed costs= 1,900,000 - (50*20,000)

Fixed costs= $900,000

7 0
2 years ago
Prepare a statement of cash flows using the indirect method for the year ended June 30, 2019. (Amounts to be deducted should be
natka813 [3]

Answer:

                                      IKIBAN INC.

           Statement of cash flow using indirect method for

                           the year ended June 30, 2019

Particulars                                                                   Amount $

Cash flow from operating activities

Net Income                                                                  145,510

<em>Adjustments to reconcile net income to net</em>

<em>cash provided by operating activities   </em>

<u>Adjustment for non cash effects</u>

Depreciation                                                                 81,600

Gain on sale of equipment                                          -4,300

<u>Change in operating assets & liabilities</u>

Increase in accounts receivable                                 -25,500

Decrease in inventory                                                  34,200

Decrease in prepaid expenses                                    3,300

Decrease in accounts payable                                    -16,500

Decrease in wages payable                                        -11,300

Decrease in income taxes payable                             <u>-2,700  </u>

Net cash flow from operating activities (A)              204,310

Cash Flow from Investing activities

New equipment purchased                                        -80,600

Equipment sold                                                             <u>12,300</u>

Net cash Flow from Investing activities (B)        -68,300

Cash Flow from Financing activities  

Cash dividends paid                                                   -162,310

($31,000 + $145,510 - $14,200)

Common stock issued                                                  83,000

Notes payable paid                                                     <u>-30,000</u>

Net cash Flow from Financing activities (C)            -109,310

Net Change in cash = A+B+C                                   $26,700

($204,310 - $68,300 - $109,310)

Beginning cash balance                                          <u>$67,000</u>

Closing cash balance                                               <u> $93,700</u>

6 0
3 years ago
Chris bought 10 shares of Apex Company for $25 each, and later sold all of them at $45 each. This transaction resulted in what t
Veseljchak [2.6K]

the answer is a capital gain . C                                                                  



5 0
3 years ago
Read 2 more answers
QS 20-26A Merchandising: Cash payments for merchandise LO P4 Garda purchased $610,000 of merchandise in August and expects to pu
SVETLANKA909090 [29]

Answer:

The cash payments for September are $646000

Explanation:

The cash payments for merchandise are divided into to parts. The previous month's 70% payments and this month's 30% payments. Thus, the cash payments for the month of september will be 70% for AAugust purchases and 30% for september's purchases.

Thus the cash payments for merchandise will be,

Cash Payments = 0.7 * 610000 + 0.3 * 730000  = $646000

6 0
3 years ago
Read 2 more answers
When average total cost is at its minimum
Shkiper50 [21]
D.) Marginal cost is equal to average total cost.  (Because when the average total cost is at its minimum, marginal cost is also at its minimum.)
4 0
3 years ago
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