A) Starts with ending inventory measured at current costs and recreates LIFO layers for measuring inventory costs.
B) Increases the recordkeeping costs of LIFO.
C) Only is allowed for internal reporting purposes.
D) None of these is correct.
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True/False
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Essay
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Multiple Choice
A) $ 480.
B) $ 288.
C) $1,360.
D) $ 144.
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Essay
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Multiple Choice
A) An additional layer of $23,000 is added to the 1/1/10 balance.
B) An additional layer of $22,000 is added to the 1/1/10 balance.
C) An additional layer of $11,000 is added to the 1/1/10 balance.
D) None of these is correct.$143,000/1.10 = $130,000.This includes the previous two layers, the first at $100,000 and the second at $20,000, plus another at $10,000.The third is then brought forward to 12/31/10 by $10,000 1.10 = $11,000.
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Essay
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Multiple Choice
A) Its 2009 net income would have been $30 million lower because inventory purchase prices were rising.
B) Its 2009 net income would have been $30 million lower because inventory purchase prices were declining.
C) Its 2009 net income would have been $30 million higher because inventory purchase prices were rising.
D) Its 2009 net income would have been $30 million higher because inventory purchase prices were declining.The effect of WW's LIFO liquidation was a reduction in pre-tax income by $50 million and a reduction in net income by $30 million.This would have been avoided if the supplier problems had been avoided.The inventory prices were declining because the effect of using older inventory prices was to increase cost of goods sold.
Correct Answer
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Multiple Choice
A) $1,580.
B) $1,510.
C) $1,575.
D) $1,470.
Correct Answer
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Multiple Choice
A) Higher under FIFO than LIFO.
B) Higher under FIFO than average cost.
C) Lower under average cost than LIFO.
D) Lower under LIFO than FIFO.
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Essay
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True/False
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Multiple Choice
A) Provides better matching of physical flow and cost flow.
B) Saves income taxes currently.
C) Simplifies recordkeeping.
D) Provides a permanent reduction of income taxes.
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Essay
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Essay
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Multiple Choice
A) 2.42.
B) 2.76.
C) 3.21.
D) None of these is correct.$138,000 [($43,000 + 57,000) 2] = 2.76
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Essay
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View Answer
Essay
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View Answer
Multiple Choice
A) $5,940.
B) $5,880.
C) $6,000.
D) $6,120.$6,000 98% = $5,880
Correct Answer
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Multiple Choice
A) Less costly to implement.
B) Less susceptible to LIFO liquidation.
C) More costly to implement.
D) More concerned with cost indexes.
Correct Answer
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