Ignoring the impact of income tax, how does the choice between FIFO and LIFO affect a company's cash flows in an inflationary environment? How does income tax impact your answer? Why?
What will be an ideal response?
If the impact of income tax is ignored, the cash flow from operating activities on the statement of cash flows is identical under all three methods. Regardless of the cost flow reporting method, the company pays the same amount of cash to purchase inventory and receives the same amount of cash when it sells inventory. However, income tax does have an impact on this decision. FIFO produces the highest gross margin; it also produces the highest net income and the highest income tax expense. In contrast, LIFO results in recognizing the
lowest gross margin, lowest net income, and the lowest income tax expense. The use of LIFO results in a lower cash outflow for income taxes.
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What is knowledge?
A. Raw facts that describe the characteristics of an event or object. B. Skills, experience, and expertise, coupled with information and intelligence, that create a person's intellectual resources. C. Information collected from multiple sources that analyzes patterns, trends, and relationships for strategic decision making. D. Data converted into a meaningful and useful context.
A country ________ when it decides to use its resources to produce only the product in which it has an absolute advantage.
A. specializes B. monopolizes C. rejects trade D. globalizes E. achieves equilibrium
Answer the following statements true (T) or false (F)
1. The process of estimating the costs of proposals in negotiations is called contract costing. 2. The outcome of collective bargaining is a unilateral change in wages, hours and working conditions. 3. When it comes to mandatory bargaining issues, the employer can only make unilateral changes once it has fulfilled its duty to bargain with the union in good faith. 4. As long as the employer has bargained in good faith, once an impasse in negotiations has been reached it is within its legal rights to make unilateral changes by implementing whatever terms it wants. 5. Direct dealing occurs when an employer tries to do an "end around" the union by talking to the employees and getting their input on issues related to negotiations without going through the union first.
The transmission of data, voice, and video via any wireless-enabled computing device, without a fixed physical connection, is a technology known as
A. personalized computing. B. GPS computing. C. digital computing. D. mobile computing. E. wireless computing.