MULTIPLE CHOICE
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? (Points : 1)
2. The use of LIFO during a long inflationary period can result in: (Points : 1)
3. The primary reason for the popularity of LIFO is that it gives: (Points : 1)
4. In determining the cost-to-retail percentage for the current year,: (Points : 1)
5. Inventory does not include: (Points : 1)
6. 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: (Points : 1)
7. 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: (Points : 1)
8. To determine the value of a LIFO layer, using dollar-value LIFO retail: (Points : 1)
9. When using the gross profit method to estimate ending inventory, it is not necessary to know: (Points : 1)
10. The inventory method that will always produce the same amount for cost of goods sold in a periodic inventory system as in a perpetual inventory system would be: (Points : 1)
Click here for the solution: 1. Nu Company reported the following pretax data for its first year of operations
