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Questions and Answers
What change in accounting policy is the business intending to make?
What change in accounting policy is the business intending to make?
- Switch from AVCO to FIFO method (correct)
- Switch from LIFO to AVCO method
- Switch from FIFO to specific identification method
- Switch from FIFO to AVCO method
How are prices of goods expected to change during the forthcoming year?
How are prices of goods expected to change during the forthcoming year?
- Expected to rise (correct)
- Expected to decrease
- Expected to remain stable
- Expected to fluctuate
If prices rise during the forthcoming year, what effect will it have on profit and closing inventories under the FIFO method?
If prices rise during the forthcoming year, what effect will it have on profit and closing inventories under the FIFO method?
- Decrease in profit and an increase in the value of closing inventories
- Increase in profit and a decrease in the value of closing inventories
- Increase in profit and an increase in the value of the closing inventories (correct)
- Decrease in profit and a decrease in the value of closing inventories
What is the likely effect of a switch from AVCO to FIFO with rising prices on profit?
What is the likely effect of a switch from AVCO to FIFO with rising prices on profit?
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Under the FIFO method, what happens when prices rise?
Under the FIFO method, what happens when prices rise?
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