2.
For each item listed in 1 through 4, place the letter of the accounting effect (a
through
e) in the space provided. You may use each letter more than once or not at all.
Accounting Effects
|
a.Current ratio and earnings per share increase.
|
b.Current ratio and earnings per share are not affected.
|
c.Current ratio increases and earnings per share decreases.
|
d.Current ratio decreases and earnings per share increases.
|
e.Current ratio and earnings per share decrease.
|
____1.During a period of increasing inventory and rising prices, a company decides to use FIFO instead of LIFO.
____2.During a period of increasing inventory and rising prices, a company decides to use averaging instead of FIFO.
____3.During a period of static prices, a company decides to use FIFO instead of LIFO.
____4.A company applies lower-of-cost-or-market for valuing ending inventory when market price is less than cost.
3.For each item listed in 1 through 2, place the letter of the accounting effect (a
through
e) in the space provided. You may use each letter more than once or not at all.
Accounting Effects
|
a.Current ratio and earnings per share increase.
|
b.Current ratio and earnings per share decrease.
|
c.Current ratio increases and earnings per share decreases.
|
d.Current ratio decreases and earnings per share increases.
|
e.Current ratio and earnings per share are not affected.
|
____1.A company applies lower-of-cost-or-market for valuing ending inventory when cost is greater than market price.
____2.During an extended period of constant prices, a company uses LIFO instead of FIFO.
4.For each item listed in 1 through 7, place the letter (a
through
e) of the accounting effect in the space provided. You may use each letter more than once or not at all.
Accounting Effects
|
a. Assets and net income increase
|
b.Assets and net income decrease
|
c.Assets decrease and net income increases
|
d.Assets increase and net income decreases
|
e.Assets and net income are not affected
|
____1.During a period of increasing inventory and rising prices, a company decides to use FIFO instead of LIFO.
____2.During a period of increasing inventory and rising prices, a company decides to use averaging instead of FIFO.
____3.During a period of increasing inventory and increasing prices, a company uses the LIFO method, which creates the largest cost of goods sold.
____4.A company applies lower-of-cost-or-market for valuing ending inventory when market price is less than cost.
____5.A company applies lower-of-cost-or-market for valuing ending inventory when cost is less than market price.
____6.During an extended period of constant prices, a company adopts LIFO instead of FIFO.