when-would-using-the-fifo-inventory-costing-method-produce-higher-inventory-account-balances-than-th

Question

When would using the FIFO inventory costing method produce higher inventory account balances than the LIFO method would?
A. inflationary times
B. deflationary times
C. always
D. never

Puneet Prajapati · Accepted Answer

Okay, so let&#x27;s start becoming solution. But before that, we will understand. But what is the meaning? Off for mattered. Okay, diesel. And 2nd 1 is leave for Okay, So we will understand this in elementary form so that it will be easier on Mr First in forest. Oh, lasting. So, first of all, we will consider the FIFA letter. Then we will move through a full method. Okay, Sophie, for matters is that which of the items are which off the vomiting has been purchased first has been purchased in first place, will be sold in first place. So it becomes technical. Select us in this time with an example. Okay, let&#x27;s just suppose there isn&#x27;t. There are four days, one, three four on each of the dates. So these are days and these are juniors. So we have exit. Is that because Joe Okay, so let&#x27;s take it here to make it move yet. So when did one? As for few full method, we have purchased and units. Then on Day two, we have registrant units than 10 units. Then venues know what happens. There&#x27;s a A company Well, sense the finished goods are We can see the product. Okay, now the fever Mother sees vich ever item comes first. Okay, Which item has been purchasing? First place will be sold first. Okay, Now let&#x27;s see if the economy produces sense products. Let&#x27;s say when Bueller&#x27;s so the 20 units. If so, from where the 20 units will be a located. Daniel, it&#x27;s from this. And then units broke this bite Daniels from this one because they&#x27;re 10 units happy. The this these down units has been, but just in first place and followed by that 10 units will be located from this 20 years. Understand? 20 minutes. Okay, So life ice. What happens that whichever item has been purchasing first place, it will be sore first, like first in first up. So we have understood the meaning of FIFA Better no. Let&#x27;s come to a different matter. Let&#x27;s suppose there are days as usual when do 34 Let&#x27;s give the junior says similar. So that would be easy toe in this day. Now what happens when Eagle me here also applies Lethal weapon? So it will be selling the units which it has bean. So selling the units which has bean purchased actively said, Okay, let&#x27;s suppose the a company says that the owners that deal this who is estimate now? What happens? How How was that? Those 30 owners to be located? As I said, last in first out, and it was first in, first up. So the last the last thing means and you know, it&#x27;s vote date for and units from there and 10 units someday. Because we have we have opportunities to sell devore present tractor units. So first and from there must 1st 2nd from there and throw. Okay, You know what happens now? What happens then? In case off inflammation, inflammation repeaters. So let us understand that also in a in fluid inflammation times during that during the petered off inflation&#x27;s what happens, the prices off goods and services rises. Okay, prices off. Birds and services Rice. Okay, but in case off deflation price off. Absent services false. Okay, No portion is as this. Then she format third would produce higher invented account balances than the before matter. Okay, so, in case of inflation that say the price off the price, the price will be the air considering the influence Lee inflation every time in the format that Okay, so in flourishing Tang will imply that price will be rising. Like, let&#x27;s say, the price on dead one is five no less, but unit now, the price is rising. $6 per unit, seven per dollar unit and $8. Okay. Know what happens in gives a fearful mattered Okay, when the prices are rising. So whenever the company will sell the items, it will sell the items off low cost your low cost, No media. Okay, we have understood that in FIFA matter a complete willing to sell 30 units those that your should be. I located firstly as 10 units out off date, one on page one, then during the unit Sunday. So the low cost middle will be We re sold out first and higher and higher cost raw material will be less inventory so we can understand. We can understand from this example that in case off inflammation times, few for method will produce higher inventory account balances than the lethal letter. Okay, so I am again repeating that if that a company&#x27;s willing present, their team owners so located 30 units to sell because to side with the customer ve vill cell, low cost, raw material first because in inflation times the price is like this from proceeding time. But Okay, so we have 5678 No, in getting condition times. And as villus people legal produce had an inventory confidences. Okay, then. Really? For so the correct choices. What ISS it is E. That is invalidation of times. Okay, please note down the first example as well. A 2nd 1 Get that clear idea about the solution. And how did the But I Okay, that&#x27;s all forever solution. Thank you.

Puneet Prajapati · Answer

okay. Sylvia will understand the night, boss. First of all, he will understand. Like to system. What is the meaning of it? System forward. By that, we will understand how many dates of energy system we have. Okay, so it refers to the system which guards seeing, and but she&#x27;s off words. You mean directly true. Okay, so it is the system. Okay? It is the system which the car sailing, but Jay&#x27;s upwards immigrated through computers. So this is the most and even so we talked about. Look, this is the most important element of invented a system. Deputation. Okay. However, there is a system. There is a system bitch record sailing, but a chase off the course through computerized sophisticated computer race. Okay, however, almost in now, what is in a green wimpy system? We have computers off place of testicular philosophically called every transaction. Okay. Veteran to sail a purchase of goods, but not Jellystone. We have recently we have perpetual inventory system that this designed to record these healing purchase off boats through computers off. Okay, now what happens? Not all of the entities okay. Not all of the entities are able to employ such computers are very in their entity record this year in purchase by that. So because most of the entities or we can say small entities. All right, short off first, what we can see have less ferns who deploy, but it sure innuendo system. Okay, okay, because many off these small and it is will not be able to deploy perpetual and make this system into their entity. So So that is our solution for the current portion. Okay. What? So our current discussion and analysis matches with Joyce D That the perpetuation in my system is very costly in expensive for small entities, especially, okay. Will be employed in entities to the car goods. Okay. So you can write down what evidence apart forever. Choice D is the correct answer. Okay. Thank you.

Puneet Prajapati · Answer

Okay, So letters understand the medium&#x27;s through which beacon a quiet or initiate the jays tradition, you know, business. And okay, so everyone knows. And most of us knows that there are only two mediums through which we can purchase or acquired any lipo from a TV and 56. Okay, so first is cash business, okay. And 2nd 1 is credit business. So Engadget bases what happens? That&#x27;s a supposed is this and that Offer goods and be departure. So a very transport or delivered Ingles. Okay. And be with make deep in it. Okay, let&#x27;s suppose $100. So this is that this is the trial of change, which will involve transfer of goods against depend away, but in case so credit basis transaction. What happens? Evil Deliver the goods. OK, that is very obvious, because otherwise transaction will not be considered to be happened. But be Bill be who? Mr A at a little boy. Let is opposed treatments. Okay. It means the purchase has been made on credit. Okay, now what happens? There is a system which being know as the Arctic your dick invented system. Okay, now what happens in this case if we purchase any item, or we can say any under D applying this this typical mattered if Jesus, Any item, Then it&#x27;s Children Car, the journal entry in the falling minute leg. First of all, it really Deborah deeper cheeses, but Jesus, let&#x27;s see, actually singular. So purchase account debit. Who Cash? Who gets it by there. So let&#x27;s suppose then you meet Is purchasing di item in cash? Okay, so entity is being the supplier in cash phone who punches. So purchase is to denote the items are raw material that has been purchased from the supplier. Okay. And cash has been done to denote that cash cash is being paid open cheese a property so we can understand that they deserve the full effect off the production. Right? Didn&#x27;t like this. The full effect. Oh, every fine and shipped on it. Okay, so we have I didn&#x27;t defied that. What are the accounts? That will be effective, you know, in games off entity, applying periodic in rental system. So that is so that matches with Joyce. Okay. Okay, that this cash and purchase Okay, So we will write. Have a choice. So I say is the correct answer. However, you can drive down angry. So okay, who get a better future difference? I have a choice is the correct answer.

Puneet Prajapati · Answer

Okay, so we are going to understand the golden rule. Okay, so these rooms have accounting will be applicable throughout accounting as a subject. Okay. Ciclista fun. We went up that I think it would be easy going mistake. And there is also one more thing that there is no very substantial logic behind that. Why? These are rules framed like this. And why so do not have such confusion. Okay, just take a note of that. And when you will practice mold, you will get hand off. Okay? So increasing expenses and a sex, we will give it to them in case off degrees, expenses and the stakes be even give up that I did with them. So these are simple rules. Like whenever they will be increasing expense. Like whenever the business center people, you know, in car such expenses or purchases Somerset&#x27;s than those who constantly deputed and they will be They&#x27;re neat or corresponding reduction in expenses in Essex. So we&#x27;re doing so they don&#x27;t find types of pounds. Me 1st 1 is SX, then second, his expenses so increasing liability Okay. Capital and revenue. There is a corresponding credit. Okay. Whereas engaged over reduction in liability. Africa and revenue problems. There is a corresponding never. Okay, so the first rule off second. So the second door stairs that increasing liability capital and revenue account. We&#x27;ll have. Okay. Did anybody first and corresponding? Angry do, However, these we will understand that. Okay, so let&#x27;s take example to understand the situation. Let&#x27;s suppose there is mystery. Okay, Who is that? You know Oh, but or not our business from nature. Okay, Now what happens? There is a second old superstar. There&#x27;s a second bus and Mr Being So what happened? So Mr Beef frequently purchases for nature, perhaps from Mr Be like J R. Stables. Okay. On sort of products on Mr Biesecker. Okay. I will pay you advance money. Okay. I&#x27;ll be your advance money in this in this financial year. And you can do you even it up. Words like chairs and tables in next financial. So everyone&#x27;s money has been received in financially, but delivery will happen in financial year. Okay. No, what happens then? This. So there are two separate randich. And first, when you first witness deceit advance money and 2nd 1 is delivery will happen. So? So in current in financial year, then this advancement. He has been deceived. We will not recognize the value of goods and services as income in books of accounts. He okay, But when delivery will have been in next financial year backed amount, which has been recorded and financially, everyone, they will be an adjustment in three. Record the income in financially or two. Okay, so who convert the amount that has been recorded in financial year into income off financially, they will be just vanity. Okay, so in that case, so I just one entry will include or we can say, with the state. McDavid who? Lebanese vehicle, How Nixon to stay. Okay, so let&#x27;s understand, Exposed that if Mr A has received word wants money from Mr B. So they&#x27;re increases a liability off mystery. The words, Mr B. Off off delivery, off chairs and tables to Mr Be. Okay, so they&#x27;re increase a liability. And what we have said, if there is increasing liberty, they will give up. We will give up, ready to them. Okay. Now, in case off adjusting and re when we will convert the advance money into income over an engineer too, because whenever there delivery will be made that they never knew or the advance money that has been received in financially of one. Okay, will be recognized as income in second financially. Yet based on the delivery made by mystery for listener be okay. Now, In that case, if there is adjustment Anti so there will get gonna spending Dabiq to the same account. Which, which hag? The crediting, for instance instead. Okay, so that&#x27;s how we do in the campaign. Like, let&#x27;s suppose advance advance payment. Okay, so we have. So let&#x27;s say so. We haven&#x27;t seen the advance payment, okay? No one ever. They will receive advance payment before delivery a woman&#x27;s offices. It will create a liability having a day of work off delivery of goods and services to estimate. But then in next, financially and supple lets it. This is a matter often interrogated, and we have come through financially. No one. We will deliver the goods and services so far in peace and liberty, they will be a petting. Okay, okay. Now, in case of delivery, they really direction in liability by because for fear as a liability, its delivery off goods and services to estimate mr me No, we believe a corresponding damage to them That would do the same in advance and payment. First of all, it will get credit. Then it will get double for the same. All. Okay, so back matches rip. Okay, So the whole process his Mac matches with choice. The for the current question that this the ankle that has bean collected. Okay, so they income has been collected in advance in financially oven. However, it will be recognized in financial year. Who? Okay, based on the delivery of goods and services to Mr Be. Okay, that&#x27;s all forever. Solution. However, we have the right. Joyce G is correct. OK, thank you.

Puneet Prajapati · Answer

because, let&#x27;s understand dickering solution. Okay, so there is a mat heard which we know ness, but make sure. Okay, what should? Okay. Requires Can you be quiet Recording. Oh, to journaling, please. Whenever the sale is May believe Mr. Okay, So there are two types off. Okay, so there are two types methods first monies, but actually, and 2nd 1 is beauty, about which I&#x27;m not talking about here, Okay. You never even case that rockets. We will help even if you have a daughter discussion over there. But however, the perpetual matter is the only matter which requires recording off journal entries whenever the same is made with the best. So this is generally happens. We consume most of the time that happens in games off, wind off, see, like whenever you. But she&#x27;s Let&#x27;s there. Parallels are forms of privileges from our, you know, big store market. What we can say like Moore&#x27;s. Okay. Did it is recording off to a journal entries whenever sale is made through the testimony. Okay, we also alone. We also know kind of stay less us $1 in damage. Okay, so we have did I have double solution. So the correct choice. So the correct choice is be okay, that this But eventually that&#x27;s all for our solution. However, you can like this this definition as his example. What the difference, that&#x27;s all. Well, first edition. Thank you.

Puneet Prajapati · Answer

I understand being meaning off on welcomes. Okay? Sort of. But that people understand There what is the actual implication or P State comes. Okay, so just the type of account. Okay? Which will have opposing effect on the previously gender. A couple dependence is okay. Although we have returned our technical definition here now, I ve vill understand this stipulation through an example. So let&#x27;s suppose there is the Mr B. Okay, who isn&#x27;t dealing off? Let&#x27;s video games. Okay, So, Mr Reyes dealing in business off Williams and Mr C is a trustworthy customer off Mr B. No. What happens, Mr. ISS Cell, So I didn&#x27;t read begins to Mr C. Okay, so after selling video games Mr A has recorded Let&#x27;s it $1000. As is revenue. Now what happens after receiving the video games for Mr A Mr Sea verifies that the video games that mark I find it really gives. OK, So what happens? Mr Cedar? Don&#x27;s back. Mr. C returns back those video games too. Mr. B, seeing that that the games that fight occurred So the actual work which which Waas which were done? No mystery boss. 500 voters. Okay, so these are there? Does Sailor does know what happened? What is what is the actual implication off contract count? Is that that then Mr is sold? We do games must to see there is never a balance off $1000. It means it visited the comfortable from Mr C. Okay, the governable from Mr C. But whatever, Mr. C return games worth off $500 to Mr A. Okay, so that the next recoverable about from Mr C as a customer now will be $500 only. Okay, so it is a sailor dunce. Okay, this is a sailor turns off $500. Now these account so sales this town will be off contra. They&#x27;ve a new accounts. Like, if it really was down on the Children renewed. That has been previously gender. Okay, so now that matches with our current solution matches with joy, See that this is this found. Okay, so that&#x27;s so you can write down what I everything so far, along with the example for everything. Okay. However, Jean saw Joy sees the correct answer. That&#x27;s all for the solution.

Problem

Which accounting rule serves as the primary basis…

Problem 6 Hard Difficulty

When would using the FIFO inventory costing method produce higher inventory account balances than the LIFO method would?
A. inflationary times
B. deflationary times
C. always
D. never

Answer

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Principles of Accounting Volume 1: Financial Accounting

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Principles of Accounting Volume 1: Financial Accounting

Mitchell Franklin, Patty Graybeal, Dixon CooperPrinciples of Accounting Volume 1: Financial Accounting

Mitchell Franklin, Patty Graybeal, Dixon Cooper

Principles of Accounting Volume 1: Financial Accounting