When a company uses LIFO for external reporting purposes and FIFO for internal reporting purposes, an Allowance to Reduce Inventory to LIFO account is used. This account should be reported
a. on the income statement in the Other Revenues and Gains section.
b. on the income statement in the Cost of Goods Sold section.
c. on the income statement in the Other Expenses and Losses section.
d. on the balance sheet in the Current Assets section.
Answer: D
Accounting
- Per U.S. GAAP, which of the following statements is correct regarding accounting changes that result in financial statements that are, in effect, the statements of a different reporting entity?
- Under U.S. GAAP, a transaction that is unusual in nature and infrequent in occurrence should be reported separately as a component of income:
- On October 1, 20X3 , Wand , Inc. committed itself to a formal plan to sell its Kam division's assets early in 20X4. On that date, Wand estimated that the fair value of the component's assets was $25,000 less than the carrying value. Wand also estimated that Kam would incur operating losses of $100,000 for the period of October 1, 20X3 through December 31, 20X3 and $50 ,000 for the period January 1, 20X4 through February 28, 20X4. All estimates proved to be materially correct. Disregarding income taxes, what should Wand report as loss from discontinued operations in its comparative 20X3 and 20X4 income statements?
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- Lore Co. changed from the cash basis of accounting to the accrual basis of accounting during the current year. The cumulative effect of this change should be reported in Lore's current year financial statements as a:
- In open market transactions , Gold Corp. simultaneously sold its long-term investment in Iron Corp. bonds and purchased its own outstanding bonds. The broker remitted the net cash from the two transactions. Gold's gain on the purchase of its own bonds exceeded its loss on the sale of the Iron bonds. Assume the transaction to purchase its own outstanding bonds is unusual in nature and has occurred infrequently. Under U.S. GAAP , Gold should report the:
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- At December 31, Year 2, Off-Line Co. changed its method of accounting for demo costs from writing off the costs over two years to expensing the costs immediately. Off-Line made the change in recognition of an increasing number of demos placed with customers that did not result in sales. Off-Line had deferred demo costs of $500,000 at December 31, Year 1, $300 ,000 of which were to be written off in Year 2 and the remainder in Year 3. Off-Line's income tax rate is 30°/o. In its Year 3 financial statements, what amount should Off-Line report as cumulative effect of change in accounting principle?
- How should the effect of a change in accounting principle that is inseparable from the effect of a change in accounting estimate be reported?
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- Scott Corporation sold a fixed asset used for operations for greater than its carrying amount. Scott should report the transaction in the income statement using the:
- According to the IASS conceptual framework, which of the following is an underlying assumption of financial statement preparation and presentation?
- According to the IASB conceptual framework, the usefulness of providing information in the financial statements is subject to the constraint of:
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- According to the FASB conceptual framework, which of the following relates to both relevance and reliability?
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- In order to calculate bond premium or discount, you need four pieces of information ?
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- Which payroll taxes is withheld from an employee's paycheck?
- True or False? - Interest Rates are generally expressed as annual Rates ( over 12 months)
- True or False? - If you Issue a bond at a premium, you receive more than face value
- What is the formula to calculate basic interest?
- Due to the importance of earnings per share information, it is required to be reported by all Public Companies Nonpublic Companies
- What effect will the acquisition of treasury stock have on stockholders' equity and earnings per share, respectively?
- In computations of weighted average of shares outstanding, when a stock dividend or stock split occurs, the additional shares are