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Why ending inventory is lower than estimated under gross profit method?
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What methods do not require a physical inventory periodic inventory system perpetual inventory method retail method or gross profit method?
periodic inventory system
Which inventory method yields highest gross profit?
FIFO
What is the difference of evaluation of inventory between weighted average method and FIFO method?
A method of inventory accounting in which the oldest remaining items are assumed to have been the first sold. In a period of rising prices, this method yields a higher ending inventory, a lower cost of goods sold, a higher gross profit (assuming constant price), and a higher taxable income. Also called FIFO.Method in calculation in which the weighted averagezzor the period is the cost of the goods available for sale divided by the number of units available for sale. When the perpetual inventory system is used, the weighted average method is called the moving average method.
Accounting profit is subjective discuss?
Here's a couple of reasons/examples why profit is subjective:1) Inventory valuation methods (LIFO,FIFO, average cost, etc.)Change the inventory valuation method, and the reported profit will change also.2)Depreciation methods(straight line, double-declining balance, etc.)Again, if thedepreciation methodis changed, reported profit changes too.
What is the FIFO method for inventory valuation may increase income tax due as well as showing the true financial position of a business with respect to inventory during the period of rising prices?
As in Period of Price rising, current market price of the inventory will be higher than the previous market price on which inventory was purchased by the business. If using FIFO method the lower value of inventry will be rocorded then the value of inventory consumed will not meet the current market position. As a result all the Expenses shown in the financial statements will be lower, profit will be higher which may cause increase in income tax due and the ending inventry will show a higher value. Newer Post
What methods do not require a physical inventory periodic inventory system perpetual inventory method retail method or gross profit method?
periodic inventory system
Which inventory method yields highest gross profit?
FIFO
What is the difference of evaluation of inventory between weighted average method and FIFO method?
A method of inventory accounting in which the oldest remaining items are assumed to have been the first sold. In a period of rising prices, this method yields a higher ending inventory, a lower cost of goods sold, a higher gross profit (assuming constant price), and a higher taxable income. Also called FIFO.Method in calculation in which the weighted averagezzor the period is the cost of the goods available for sale divided by the number of units available for sale. When the perpetual inventory system is used, the weighted average method is called the moving average method.
What is adjusted selling price method in valuation of inventories?
adjusted selling price method , retail price of the inventory is calculated and marjinal profit is deducted from it generally used in retail business also known as Retail inventory method
During inflation what is the best method to value the stock?
during inflation the best method to use inventory valuation that produces that produces that least amount of profit is
Inventory is reported at cost plus gross profit recognized to date under what revenue recognition methods?
instalment method
Accounting profit is subjective discuss?
Here's a couple of reasons/examples why profit is subjective:1) Inventory valuation methods (LIFO,FIFO, average cost, etc.)Change the inventory valuation method, and the reported profit will change also.2)Depreciation methods(straight line, double-declining balance, etc.)Again, if thedepreciation methodis changed, reported profit changes too.
The cost of good sold by afirms was 20000 it maks a gross profit of 20 percent on saleif inventory at the beginning of the year was 4500 and the ending was 5500 what is inventory turnover ratio?
To calculate the inventory turnover ratio, you need to divide the cost of goods sold by the average inventory. To find the average inventory, add the beginning and ending inventory levels and divide by 2. In this case, the average inventory is (4500 + 5500) / 2 = 5000. The inventory turnover ratio would be 20000 / 5000 = 4.
What is the FIFO method for inventory valuation may increase income tax due as well as showing the true financial position of a business with respect to inventory during the period of rising prices?
As in Period of Price rising, current market price of the inventory will be higher than the previous market price on which inventory was purchased by the business. If using FIFO method the lower value of inventry will be rocorded then the value of inventory consumed will not meet the current market position. As a result all the Expenses shown in the financial statements will be lower, profit will be higher which may cause increase in income tax due and the ending inventry will show a higher value. Newer Post
If merchandise inventory is being valued at cost and the purchase price is steadily falling which method of costing will yield the largest gross profit?
The method of costing that will yield the highest net income is FIFO. FIFO stands for first in, first out.
What is an example of the percentage of completion method in construction?
PERCENTAGE-OF-COMPLETION METHOD (example)---- A construction project is sold at a bid price of $2,000,000.00, estimated costs at the beginning of the project to complete are $1,800,000.00. So, Gross Profit is estimated as $200,000.00 for the project, or a Gross Profit rate of 10%.---- ---- At the end of the first year 800,000.00 of costs are incurred. If you divide costs incurred by total estimated costs you get: 800,000/1,800,000 = 44% of the projects costs incurred. Under the Percentage-of-Completion method, therefore, 44% of the Gross Profit, or $88,000.00, should be recorded as earned. At the end of the second year, the estimated total costs to complete may change to $1,900,000.00. Therefore, a new Gross Profit percentage must be used (2,000,000 - 1,900,000 = 100,000.00; 100,000/2,000,000 = 5%). If costs incurred during the second year are 600,000, then estimated Gross Profit under the Percentage-of-Completion method are 5% of 1,400,000 (total costs incurred-to-date = 800,000 + 600,000) or $70,000.Because $88,000 was already booked last year, at the end of the next year, a loss of $18,000 ($70,000 - $88,000) should be recorded. And so on... NOTE: The weakness of the Percentage-of-Completion method is the required use of estimated costs.
How does different inventory valuation method affect the profit of the manufacturing industries?
Revenue-Cost of Goods Sold(CGS)=Gross Margin. The valuation of inventory drives the cost of goods sold (CGS). The higher the value of your inventory, the higher your CGS, thus lower gross margin. The lower the valuation of your inventory, the lower your CGS, thus higher gross margins.
