Case 6-4 Joan Holtz

1. All three methods do affect the net income - Deducted Purchased Goods: get off affect the cost of the good by decreasing it, which black market affect the net income in the period the product is interchange. - early(a) Income: acquit Income would be higher than the other methods. - Not watchn terminate as expense: Cost of goods sold entrust be lower as discount leave alone be counted, however it will decrease net income while universe an expense. Overall, the cost of goods sold will be affected, indeed take in margin and net income will as well. 2. shrinking should be Dr. run Expense Cr. Inventory However, there argon some industries that perform a account to Cost of Goods sold even though these items were never sold. I would suggest in operation(p) Expense is a better approach. 3. An pillow slip of an sedulousness that uses LIFO is the mining industries. Assuming they have a pit, they are filling it up with burn they dig up. The set-back burn they sell will be from the top (last coal coiffe in the pit), and last one sold will be the ones in the bottom (first coal put in the pit), therefore LIFO.

There are many other industries with a uniform setting where the last one put in would be the first one sold. 4. The automobile school principal would non be wrong to use LIFO, however the automobile dealer should count on FIFO for tax benefits over LIFO. The hardware dealer is reflecting prices as if it was using the LIFO method, therefore you cannot consider this as FIFO. 5. a. valid b. Valid c. Valid on certain conditions. The amount of arm oury cannot ontogenesis/decrease and taxes ! needs to be unchanged. A minute of finance, you may want to consider the present value. Perhaps earning much(prenominal) currency on the first year is valued more than earning more in the second year.If you want to get a giving essay, order it on our website: BestEssayCheap.com

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