ACC 305 Week 4 Quiz

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1. Nu Company reported the following pretax data for its first year of operations. Net sales 2,800 Cost of goods available for sale 2,500 Operating expenses 880 Effective tax rate 40% Ending inventories: If LIFO is elected 820 If FIFO is elected 1,060. What is Nu’s gross profit percentage if it elects LIFO?

2. During periods when prices are rising and inventory quantities are stable, cost of goods sold will be:

3. The use of LIFO during a long inflationary period can result in:

4. So. California Inc., through no fault of its own, lost an entire plant due to an earthquake on May 1, 2006. In preparing their insurance claim on the inventory loss, they developed the following data: Inventory January 1, 2006, $300,000; sales and purchases from January 1, 2006, to May 1, 2006, $1,300,000 and $875,000, respectively. So. California consistently reports a 40% gross profit. The estimated inventory on May 1, 2006, is:

5. In a period when prices are falling and inventory quantities are stable, the lowest taxable income would be reported by using the inventory method of:

6. To determine the value of a LIFO layer, using dollar-value LIFO retail:

7. In a period when prices are rising and inventory quantities are stable, the inventory method that would result in the highest ending inventory is:

8. To determine if an increase in the dollar value of inventory is due to increased quantities, using dollar-value LIFO retail:

9. Under the gross method, purchase discounts taken are:

10. When reported in financial statements, a LIFO Allowance account usually: