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1. Outstanding liabilities

2. By undervaluing current assets

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Which accounting term best describes assumption made in applying the four inventory methods?

Cost Flow Assumption


What are the four key change components necessary to ensure successful implementation of this strategy?

Acquisition Methods, Process, Technology, and Prices


State any four methods of Depreciation?

sum of the year digit (syd), declining balance (db), double declining balance (ddb) and straight line.


Assumption made in applying the four inventory methods?

When applying the four inventory methods—FIFO (First-In, First-Out), LIFO (Last-In, First-Out), weighted average cost, and specific identification—an assumption is made regarding the flow of inventory. Specifically, it is assumed that the order in which inventory is purchased reflects the order in which it is sold, impacting cost of goods sold and ending inventory valuation. Additionally, these methods assume that inventory costs remain stable over time, which may not account for fluctuations in market prices. Lastly, the chosen method can significantly affect financial statements and tax liabilities, influencing managerial decisions.


Why is depreciation necessary?

Depreciation is an incentive for investment in equipment. It encourages businesses to buy equipment that will be used to provide employment.Depreciation is effectively a tax credit. It reduces the profits and therefore the taxes due.Depreciation cost is a term used to account for the loss of value in an item over time. There are four methods of depreciation that are approved for use under the generally accepted accounting principles or GAAP. The most commonly used methods are straight-line depreciation, declining balance and percentage of use.

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