31 which of the following is false concerning the lower of cost or market lcm when a 4352249

31.Which of the following is FALSE concerning the lower-of-cost-or-market (LCM) when applied to the valuation of inventory?

a.inventory must be written-up (increased) if current market cost of ending inventory is greater than the cost of ending inventory as estimated using the LIFO method

b.inventory must be written-down (decreased) if current market cost of ending inventory is less than the cost of ending inventory as estimated using the LIFO method

c.inventory must be written-down (decreased) if current market cost of ending inventory is less than the cost of ending inventory as estimated using the FIFO method

d.All of the above are FALSE

32.Which inventory measurement method would have the most recent costs in cost of goods sold?

a.first-in-first-out (FIFO)

b.last-in-first-out (LIFO)

c.weighted average

d.work-in-process

33.Which inventory method results in the lowest income taxes during periods of increasing prices?

a.first-in-first-out (FIFO)

b.last-in-first-out (LIFO)

c.weighted average

d.work-in-process

34.The inventory valuation method that results in the recognition of the most recent inventory costs on the balance sheet and income statement, respectively, is

Balance Sheet         Income Statement

a.FIFO                          LIFO

b.FIFO                          FIFO

c.LIFO                          LIFO

d.LIFO                          FIFO

35.The inventory valuation method that results in the recognition of the oldest inventory costs on the balance sheet and income statement, respectively, is

Balance Sheet          Income Statement

a.FIFO                            LIFO

b.FIFO                            FIFO

c.LIFO                            LIFO

d.LIFO                            FIFO

36.When the cost of inventory is decreasing, which of the following is TRUE regarding the three best-known inventory valuation methods?

a.the LIFO method will yield the smallest amount for cost of goods sold

b.the weighted-average method will yield the largest amount for ending inventory

c.the FIFO method will yield the highest amount for ending inventory

d.both LIFO and FIFO will yield a smaller tax obligation than weighted-average

37.The Big Tobacco Company sells cigars. Inventory information for a recent week is below:

UnitsUnit CostTotal Cost

Beginning inventory2$ 6$12

Purchase4832

Purchase61060

If five units were sold during the week, what is the COST OF GOODS SOLD if the LIFO method is used?

a.$68

b.$54

c.$50

d.$36

38.Steinbrenner Company has the following inventory information for a recent year:

Beginning inventory$500(10 units with an average cost of $50 each)

February purchase10 units @ $48 each

August purchase30 units @ $52 each

November purchase20 units @ $48 each

Ending inventory25 units

Compute the cost of ending inventory using the weighted average method.

a.$1,250.00

b.$1,240.00

c.$1,237.50

d.$1,220.00

39.An advocate of the LIFO inventory method would maintain that

a.current costs are matched with current selling prices

b.the lowest possible costs are always shown in the ending inventory

c.the oldest inventory is relieved of its cost before the newer purchases

d.the highest possible costs are always shown in the ending inventory

40.Automated Merchandising Company uses the LIFO method of cost assignment. The following data are available:

DateUnitsUnit CostTotal Cost

Beginning inventoryJan.  1400$24$ 9,600

PurchaseMar. 138002822,400

PurchaseJune 201,2003238,400

Ending inventoryDec. 31200

The value of the ending inventory will be

a.$2,400

b.$4,800

c.$5,866

d.$6,400

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