Ask Question
BusinessBusiness
Today, 12:56

To better account for the older merchandise inventory, the president of Widget Tek wonders whether the merchandise inventory should be valued using a different method. Do you agree, and why or why not? Yes, because valuation at lower of cost or market will provide the highest gross profit. 2. Will a change in inventory method increase a company's net income on its financial statements? 3. When is merchandise inventory not valued at cost?

+1
Answers (1)
  1. Today, 14:50
    0
    Answer: (1) Yes because valuation at lower of cost or market will provide the highest of profit (2) A change in inventory method increase a company's net income on its financial statements (3) When the current prices for these goods have fallen considerably at the time of stock taking.

    Explanation:

    (1) The valuation at lower of cost or market will provide the highest gross profit, it may happened when the company make use of FIFO method of stock valuation, in the sense that, under FIFO method the first item in stock is the cheapest. While under LIFO, the stock valuation will give the lowest profit because the the older item in stock are not always sold the buyers do prefer to buy the newer items in stock as a result of these such older items may lose their value.

    (2) A company must stick to a particular method of stock valuation according to Financial Accounting Standard Board (FASB). The method in use for stock valuation must show the state of affairs for the business for that financial year. It must give a true state of affairs about their net income. Therefore, a change in the method of inventory may increase a net income on their financial statement which may not be a true record of the net income realized from the business for that particular period.

    (3) As a rule, The stock should be valued at the cost price at which they were obtained but it may so happen that the current prices for these goods have fallen considerably at the time of stock taking. If this happen, then the stock must be valued at the current market price because this is the price the stock would cost at that time.
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “To better account for the older merchandise inventory, the president of Widget Tek wonders whether the merchandise inventory should be ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers
You Might be Interested in
Economists believe that the most important cause of the increase in income inequality is:
Answers (1)
How did central planning affect consumers in the former soviet union? government-provided housing was costly but readily available. consumers often had to wait in long lines to purchase goods and services.
Answers (1)
g if you invest in a business that you expect that will earn profit (in thousands of dollars) of $12 by the end of the year, $17 next year, $25 the third year, and $30 the 4th year. Other investments of equal risk earn 8%.
Answers (1)
Synergy Inc. is a medium-sized logistics company. The management is facing tough times as the workers are dissatisfied and are engaging in a number of deviant workplace behaviors such as stealing and substance abuse during working hours.
Answers (1)
Which is a guideline for doctors pursuing research with human subjects? the human subject does not need to consent. the experiment can be based on activity that does not necessarily promote a greater good for society.
Answers (1)
New Questions in Business
Notice that real GDP trends upward over time but experiences ups and downs in the short run. These short-run fluctuations in real GDP are often referred to as
Answers (1)
Which of the following is included in operating activities? a. An increase in equity b. An increase in accounts receivable c. An increase in long-term debt d. All of these choices are correct. g
Answers (1)
Need a name for my invention for a business class, its a blanket that can adjust to your body temperature.
Answers (1)
To better account for the older merchandise inventory, the president of Widget Tek wonders whether the merchandise inventory should be valued using a different method.
Answers (1)
Kyle is applying to be a police officer. In his interview, he describes that he loves watching the news and following current cases. He explains that he is honest, caring, compassionate, and has a very deep sense of integrity.
Answers (1)
Home » Business » To better account for the older merchandise inventory, the president of Widget Tek wonders whether the merchandise inventory should be valued using a different method.
Sign Up Forgot Password?