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  • 1 Which Inventory Costing Method Generally Results in Less Current

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    The LIFO inventory costing method generally results in less current taxes paid by a company compared to other methods like FIFO. A grocer should use the FIFO method. If a company used FIFO and reported $10,000 in cost of goods sold for the year, but would have reported $12,000 using LIFO, then the tax deferral would be $2,000 * 30% tax rate = $600.

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    The LIFO inventory costing method generally results in less current taxes paid by a company compared to other methods like FIFO. A grocer should use the FIFO method. If a company used FIFO and reported $10,000 in cost of goods sold for the year, but would have reported $12,000 using LIFO, then the tax deferral would be $2,000 * 30% tax rate = $600.

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    1 Which Inventory Costing Method Generally Results in Less Current

    Uploaded by

    hassan taimour
    The LIFO inventory costing method generally results in less current taxes paid by a company compared to other methods like FIFO. A grocer should use the FIFO method. If a company used FIFO and reported $10,000 in cost of goods sold for the year, but would have reported $12,000 using LIFO, then the tax deferral would be $2,000 * 30% tax rate = $600.

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    © All Rights Reserved
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    1 Which inventory costing method generally results in less

    current #710
    1. Which inventory costing method generally results in less current taxes paid by the
    company?a. LIFOb. FIFOc. Moving Averaged. All methods result in the same taxes paid2.
    Which inventory costing method should a grocer use?a. LIFOb. FIFOc. Moving Averaged. A
    grocer can use any of the inventory costing methods3. A company that uses the FIFO costing
    method reports cost of goods sold for the year of $10,000. Had it used the LIFO method, cost of
    goods sold would have been $12,000. How much in taxes could the company have deferred in
    the current year if it had used the LIFO method? Assume a 30% tax rate.a. $2,000b. $600c.
    $1,400d. Cannot tell from the given information4. A company overstates its ending inventory by
    $2,000. Which of the following is true concerning the effect of this error on cost of goods sold in
    the year of the error?a. Cost of goods sold will be unaffectedb. Cost of goods sold will be
    understatedc. Cost of goods sold will be overstatedd. Cannot tell from given information5. A
    company understates its ending inventory by $2,000. Which of the following is true concerning
    the effect of this error on cost of goods sold in the year after the error (assuming no other
    errors)?a. Cost of goods sold will be unaffectedb. Cost of goods sold will be understatedc. Cost
    of goods sold will be overstatedd. Cannot tell from given information6. A counterbalancing
    inventory error will result in:a. an overstatement of income.b. an understatement of income.c.
    both an overstatement and understatement of annual income that offset each other such that
    total net income over the two years is correct.d. cannot tell from given information.7. Suppose
    that Lee Enterprises usually generates a 25% gross profit on sales. If Lee's annual sales are
    $100,000, what is Lee's estimated cost of goods sold using the gross profit method?a. $0b.
    $25,000c. $75,000d. $100,0008. Suppose that Lee Enterprises usually generates a 40% gross
    profit on sales. If Lee's annual sales are $130,000 and cost of goods available for sale is
    $90,000, what is Lee's estimated ending inventory using the gross profit method?a. $38,000b.
    $90,000c. $78,000d. $12,000View Solution:
    1 Which inventory costing method generally results in less current

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