Accounting - Study Mode
[#1636] Shares are of following types
Correct Answer
(C) 2
[#1637] Which one of the following methods of inventory costing yields highest taxable income?
Correct Answer
(A) FIFO
Explanation
Solution: FIFO methods of inventory costing yields highest taxable income. First-in, first-out, or FIFO, applies the earliest costs first. In rising markets, FIFO yields the lowest cost of goods sold and the highest taxable income.
[#1638] Which one of the following methods of inventory costing produces ending stock cost close to the market value of the inventory?
Correct Answer
(A) FIFO
Explanation
Solution: FIFO methods of inventory costing produces ending stock cost close to the market value of the inventory. FIFO (First-in, first-out) method is based on the perception that the first inventories purchased are the first ones to be sold. It is a cost flow assumption for most companies. Since the theory perfectly matches to the actual flow of goods, therefore it is considered as the right way to value inventory.
[#1639] Which one of the following inventory costing methods is supposed to issue the most recently purchased goods?
Correct Answer
(B) LIFO
Explanation
Solution: LIFO inventory costing methods is supposed to issue the most recently purchased goods. LIFO, which stands for last-in-first-out, is an inventory valuation method which assumes that the last items placed in inventory are the first sold during an accounting year.
[#1640] Opening inventory + Net purchases = ?
Correct Answer
(D) Cost of goods available for sale
Explanation
Solution: Opening inventory + Net purchases = Cost of goods available for sale. The cost of goods available for sale equals the beginning value of inventory plus the cost of goods purchased.