【正文】 97 What is the ending inventory level in dollars using the FIFO Method? A. $4,. B. $5,. C. $3,. D. $3,. D Ending Inventory = 507 X 7 = $. Question ID: 14736 Which of the following is an INCORRECT statement concerning a period of rising prices? A. The current ratio is less in the case of the LIFO out inventory valuation method than for the FIFO method. B. The debttoequity ratio is greater using the LIFO inventory valuation method than using the FIFO method. C. Gross profit using the LIFO inventory valuation method is less than the gross profit using the FIFO method. D. Inventory turnover is less using the LIFO inventory valuation method than using the FIFO method. D LIFO results in lower inventory, hence a lower inventory turnover. 23 Question ID: 14731 Last in, first out (LIFO) results in all of the following during periods of rising prices EXCEPT lower: A. working capital. B. cost of goods sold. C. taxes. D. inventory balances. B During periods of rising prices LIFO results in higher cost of goods sold because the last items purchased (most expensive) are the first items sold. Question ID: 14844 Which accounting methods are preferable for ine statements and balance sheets? A. LIFO for the balance sheet and FIFO for the ine statement. B. LIFO for both ine statements and balance sheets. C. FIFO for both ine statements and balance sheets. D. LIFO for ine statements and FIFO for the balance sheet. D LIFO allocates the most recent prices to the cost of goods sold and provides a better measure of current ine. For balance sheet purposes, inventories based on FIFO are preferable since these values most closely resemble current cost and economic value. Setup Text: Units Unit Price Beginning Inventory 688 $ Purchases 719 $ 24 Sales 900 $ SGA Expenses $3,293 per annum ?? Question ID: 14766 What are the Earnings Before taxes using the Weighted Average Method? A. $5,. B. $4,. C. $3,. D. $4,. B EBT = SALES (COGS + SGA)= 12600 (+3293)=$. Question ID: 14766 What are the Earnings Before taxes using the FIFO Method? A. $3,. B. $3,. C. $5,. D. $4,. C EBT = SALES (COGS + SGA) = 12600 (3548 + 3293)= $. Question ID: 14766 What are the Earnings Before taxes using the Last in First Out (LIFO) Method? A. $5,. B. $3,. C. $4,. 25 D. $3,. D EBT = SALES (COGS + SGA) = 12600 ( 5576 + 3293) = $. Question ID: 14834 Given the following data what is the ending inventory using the weighted average cost method? Purchases Sales 85 units at $70/unit 45 units at $75/unit 60 units at $55/unit 50 units at $60/unit 95 units at $65/unit 55 units at $70/unit A. $3,208 B. $5,784 C. $5,700 D. $5,205 B Average cost per unit purchased: 85 units at $70 /per unit = $5,950 60 units at $55 /per unit = $3,300 95 units at $50 /per unit = $6,175 Total = 240 units, $15,425 Average cost per unit = $15,425 /240 units = $ /unit Purchased 85+60+95=240 units. Sold 45+50+55=150 Ending inventory = 240150=90 units x $ /unit = $5,784 26 .: Analysis of LongLived Assets, Pt I: The Capitalization Decision Question ID: 24765 For firms that expense costs, which of the following statements is FALSE? A. Net cash flows are equal with either capitalization method. B. Higher ine variability will occur pared to the capitalization method. C. Higher debt/equity and debt/assets will occur because of lower asset and equity levels. D. Lower ROA and ROE will occur because of higher asset and equity levels in the early years. D The firms that expense costs will have a lower ROE and ROA in early years because of lower profits and not due to higher assets and equity levels (actually the assets are lower due to expensing the costs). Question ID: 14865 Which of the following statements regarding firms that capitalize versus expense costs is FALSE? A. Cash flow from financing is the same if costs are capitalized or expensed. B. Firms that capitalize costs initially have lower profitability ratios pared to expensing firms. C. Costs of acquiring a trademark are capitalized. D. Marketing costs related directly to sales are capitalized. B In the early years, firms that expense costs will have lower profitablity ratios such as return on assets (ROA) and return on equity (ROE). In later years as growth subsides, expensing firms will have lower asset and equity balances and hence higher profitablity measures such as ROA and ROE. 27 Question ID: 14863 Compared to firms that expense costs, firms that capitalize expenses will have: A. All of these choices are correct. B. lower leverage ratios. C. lower ine variablity. D. higher cash flow from operations. A Question ID: 24761 The management of Berger Investments has changed their policy and will capitalize costs instead of expensing them. Due to the new policy, Berger will: A. report a smooth ine pattern initially, but the variance will increase over time. B. have lower ine variance as it grows, but the variance will increase as the firm matures. C. report the same ine pattern as when it expenses the costs. D. have smoother reported ine over time. D If management decides to capitalize costs instead of expensing them, it will report smoother reported ine over time. If the firm decided to expense costs as incurred, it will have greater variance in reported ine. This variance declines as the firm matures and is lower for larger firms. Question ID: 24762 Meyer Investment Advisory and Smith Brothers Investments are operationally identical except that Meyer capitalizes costs while Smith expenses costs. Compared to Smith, Meyer is likely to have: 28 A. higher cash flows in early years and t