1.a.)When using FIFO for inventories, market value generally refers to under U.S. GAAP and ...

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Accounting

1.a.)When using FIFO for inventories, market value generallyrefers to under U.S. GAAP and under IFRS.
A) current replacement cost; historical cost
B) historical cost; net realizable value
C) historical cost; current replacement cost
D) net realizable value; net realizable value
b. Margaret Company reported the following information for thecurrent year:
Net sales
$3,000,000
Purchases
$1,957,000
Beginning Inventory
$245,000
Ending Inventory
$115,000
Cost of Goods Sold
65% of sales
Industry Averages available are:
Inventory Turnover
5.29
Gross Profit Percentage
28%
How do the inventory turnover and gross profit percentage forMargaret Company compare to the industry averages for the sameratios? (Round inventory turnover to two decimal places. Roundgross profit percentage to the nearest percent.)
A) Margaret Company has superior gross profit percentage andinventory turnover.
B) Margaret Company has superior gross profit percentage andinferior inventory turnover.
C) Margaret Company has inferior gross profit percentage andsuperior inventory turnover.
D) Margaret Company has inferior gross profit percentage andinventory turnover.
c.)Ending inventory for the year ended December 31, 2019, isunderstated by $8,000. How will this affect net income for 2019 and2020?
A) Net income will be understated by $8,000 in 2019 and2020.
B) Net income will be overstated by $8,000 in 2019 and 2020.
C) Net income will be understated by $8,000 in 2019 andoverstated by $8,000 in 2020.
D) Net income will be overstated by $8,000 in 2019 andunderstated by $8,000 in 2020.
d.) Ending inventory for the year ended December 31, 2019, isunderstated by $23,000. How will this error affect net income for2020?
A) Net income will be understated by $46,000.
B) Net income will be overstated by $46,000.
C) Net income will be understated by $23,000.
D) Net income will be overstated by $23,000.
e.) Beginning inventory for the year ended December 31, 2019, isunderstated. How will this error affect net income for 2019 and2020?
A) 2019 overstated; 2020 understated
B) 2019 understated; 2020 overstated
C) 2019 overstated; 2020 no effect
D) 2019 understated; 2020 no effect
f.)Beginning inventory for the year ended December 31, 2019, isunderstated. How will this error affect net income for 2019 and2020?
A) 2019 overstated; 2020 understated
B) 2019 understated; 2020 overstated
C) 2019 overstated; 2020 no effect
D) 2019 understated; 2020 no effect

Answer & Explanation Solved by verified expert

4.5 Ratings (718 Votes)

1 Ans is B In GAAP inventory is recorded as cost or market value whichever is less In IFRS inventory should be recorded as cost or net realizable value whichever is less 2Option B is Correct Gross Profit Percentage Gross Profit Net Sales 100 Gross Profit Sales Cost of Goods Sold Cost See Answer

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Net sales	$3,000,000
Purchases	$1,957,000
Beginning Inventory	$245,000
Ending Inventory	$115,000
Cost of Goods Sold	65% of sales

1.a.)When using FIFO for inventories, market value generally refers to ________ under U.S. GAAP and ________...