0
What inventory cost methods results in lowest net income during a period of rising inventory costs?
Wiki User
∙ 10y ago
Last-in, first-out (LIFO)
Wiki User
∙ 10y ago
Add your answer:
Earn +20 pts
Merchandise Inventory is found on the income statement. True or false?
It is true that merchandise Inventory is found on the income statement.
What happens to net income if inventory is understated?
If inventory is understated, net income is also understated because cost of goods sold will be overstated
When the perpetual inventory system is used the inventory sold is shown on the income statement as?
cost of merchandise sold.
If a company uses the periodic inventory system what is the impact on net income of including goods in transit fob shipping point in purchases but not ending inventory?
Understate net income
3 Which statement provides a financial summary of the firms operating results during a specified period?
Income Statement
What is the inventory valuation method that results in the lowest taxable income in a period of inflation?
LIFO method
Why do income statements for internal purposes differ to published income statements?
The difference in operating income between the two methods is the difference in ending inventory values, which is the fixed overhead costs that have been capitalized as an asset ( inventory ) because overhead costs that have been capitalized as an asset.
Merchandise Inventory is found on the income statement. True or false?
It is true that merchandise Inventory is found on the income statement.
What happens to net income if inventory is understated?
If inventory is understated, net income is also understated because cost of goods sold will be overstated
What part of the elements of financial statements does inventory bleong to?
Inventory is part of Balance sheet as well as income statement. Inventory is shown as an asset in balance sheet and as an expense when used in income statement.
Do you have to report your inventory as income each year?
Your inventory is an ASSET (has value in and of itself) but it does not become income unless/until it is sold for more than you paid for it.
When the perpetual inventory system is used the inventory sold is shown on the income statement as?
cost of merchandise sold.
If a company uses the periodic inventory system what is the impact on net income of including goods in transit fob shipping point in purchases but not ending inventory?
Understate net income
3 Which statement provides a financial summary of the firms operating results during a specified period?
Income Statement
Does inventory goes into the cash flow statement?
Yes, changes in inventory do appear in the cash flow statement. Inventory is a current asset, and changes in inventory, such as purchases or sales, have an impact on cash flow from operating activities. An increase in inventory is subtracted from net income to calculate cash provided by operating activities, while a decrease in inventory is added back to net income.
Methods of calculating national income?
There are three methods in calculating the national income. One is the net output method. Another is the income method, and lastly, the outlay method.
Should the plant accountant order the inventory purchase to lower income?
S. R. Marsh Wholesale Corp. uses the LIFO method of inventory costing. In the current year, profit at S. R. Marsh is running unusually high. The corporate tax rate is also high this year, but it is scheduled to decline significantly next year. In an effort to lower the current year's net income and to take advantage of the changing income tax rate, the president of S. R. Marsh Wholesale instructs the plant accountant to recommend to the purchasing department a large purchase of inventory for delivery 3 days before the end of the year. The price of the inventory to be purchased has doubled during the year, and the purchase will represent a major portion of the ending inventory value. You strongly suspect that the president will return the purchased inventory after January 1st. Instructions Should the plant accountant order the inventory purchase to lower income? What are the ethical implications of this order?
