LIFO Accounting Assingment Help With Solution

LIFO Accounting Assingment Help With Solution

 
MULTIPLE CHOICE
 
1. The accumulated benefit obligation measures
a. the pension obligation on the basis of the plan formula applied to years of service to date and based on existing salary levels.
b. an estimated total benefit at retirement and then computes the level cost that will be sufficient, together with interest expected to accumulate at the assumed rate, to provide the total benefits at retirement.
c. the pension obligation on the basis of the plan formula applied to years of service to date and based on future salary levels.
d. the shortest possible period for funding to maximize the tax deduction.
 
2. The projected benefit obligation measures
a. the pension obligation on the basis of the plan formula applied to years of service to date and based on existing salary levels.
b. an estimated total benefit at retirement and then computes the level cost that will be sufficient, together with interest expected to accumulate at the assumed rate, to provide the total benefits at retirement.
c. the pension obligation on the basis of the plan formula applied to years of service to date and based on future salary levels.
d. the shortest possible period for funding to maximize the tax deduction.
 
3. A liability for pensions is reported on the balance sheet when
a. the projected benefit obligation exceeds the fair value of pension plan assets.
b. the pension expense reported for the period is greater than the funding amount for the same period. c. the accumulated benefit obligation exceeds the fair value of pension plan assets.
d. vested benefits exceed the fair value of pension plan assets.

4. The major difference between accounting for pensions and the accounting for other postretirement benefits is that firms
a. do not need to report an excess of the accumulated benefits obligations over assets in a postretirement benefits fund as a liability on the balance sheet.
b. do not need to disclose any estimates used in calculating projected benefits.
c. postretirement benefits are normally not material for most companies and do not need to be disclosed. d. do not need to set aside funds for future postretirement benefits as they do for pension benefits.

5. Analysts concerns with postretirement benefits include all of the following except:
a. should the underfunded postretirement benefit obligation be added to liabilities in assessing risk? b. How reasonable are the firms’ assumptions regarding health care cost increases?
c. Is the postretirement benefit fund adequately paying benefits.
d. Is the postretirement benefit fund generating returns consistent with the expected rate of return?
 
6. All of the following conditions signal that revenue recognition may have been recorded too early except: a. large and volatile amounts of uncollectible accounts receivable.
b. a decrease in the number of days accounts receivable are outstanding. c. unusually large amounts of returned goods.
d. excessive warranty expenditures.
 
7. Which of the following will most likely help identify an increasing proportion of uncollectible sales? a. accounts receivable turnover
b. the ratio allowance for doubtful accounts to gross accounts receivable c. the ratio of sales returns to sales
d. the ratio of cost of sales to sales

8. A typical defined benefit pension plan formula includes all of the following except: a. the number of years of employee service
b. the fair market value of pension plan assets c. a multiplier based on age
d. the final salary at retirement date
 
9. Regarding actuarial assumptions, firms must disclose in notes to the financial statements all of the following except:
a. the discount rate used to compute the pension benefit obligation. b. the expected rate of return on pension investments.
c. estimates of the number of retirees over the next 10 years. d. the rate of compensation increase.
 
10. When prices are increasing, companies that use the LIFO method of accounting for inventory will report a. Lower cost of goods sold amounts in comparison to the FIFO method
b. Higher sales amounts in comparison to the FIFO method
c. Higher ending inventory amounts in comparison to the FIFO method d. Lower gross profit margins in comparison to the FIFO method
 
11. Under the percentage-of-completion contract method
a. revenue and cost are recognized during the production cycle, but gross profit recognition is deferred until the contract is completed.
b. revenue, cost, and gross profit are recognized during the production cycle.
c. revenue, cost, and gross profit are recognized at the time the contract is completed. d. none of these
 
12. The installment method of revenue recognition can be used when cash collectibility is uncertain. The installment method
a. requires that no income is recognized until all installments are received.
b. requires that gross profit is recognized as each installment payment is received.
c. requires that entire cost of the sale be recovered prior to any income being recognized. d. allows revenue recognition at the time of the sale.
 
13. The use of LIFO rather than FIFO for inventory costing under normal economic conditions results in: I. lower net income.
II. higher total assets.
III. gher retained earnings.
IV. unchanged retained earnings. a. II and III
b. I, II and IV c. I only
d. I and IV
 
14. Which of the following is not a common characteristic of a company choosing to use LIFO rather than FIFO? a. Larger inventory balances
b. Higher variability in inventory balances c. Greater expected tax savings
d. Larger in size
 
15. Financial Statements of ABC Corp. indicates that ending inventory levels in 2005 and 2006 were $200,000 and $350,000 respectively. Cost of Goods sold for 2005 and 2006 were $1,900,000 and $2,200,000 respectively. Purchases in 2006 were:
a. $1,950,000 b. $2,150,000 c. $2,350,000 d. $1,850,000

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