Refer to the financial statements of The Home Depot in Appendix A at the end of this
Question:
1. How much inventory does the company hold on January 30, 2011? Does this represent an increase or decrease in comparison to the prior year?
a. $10,188 (Decrease)
b. $10,188 (Increase)
c. $10,625 (Decrease)
d. $10,625 (Increase)
2. What method(s) does the company use to determine the cost of its inventory? Describe where you found this information.
a. LIFO; Note 1
b. FIFO; Note 1
c. Weighted average cost; the Balance Sheet
d. Specific Identification; Management's Discussion and Analysis
3. Compute to one decimal place the company's inventory turnover ratio and days to sell for the most recent year.
a. 4.3 and 84.9
b. 4.2 and 86.9
c. 6.5 and 56.2
d. 4.6 and 79.3
4. Does the company believe FIFO, or weighted average cost, is a better method?
a. FIFO
b. Weighted average cost
Inventory Turnover Ratio
Inventory Turnover RatioThe inventory turnover ratio is a ratio of cost of goods sold to its average inventory. It is measured in times with respect to the cost of goods sold in a year normally. Inventory Turnover Ratio FormulaWhere,... Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial... Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
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1 D 10625 Increase 2 B FIFO Note 1 3 A 43 and 849 4 B ...View the full answer
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Related Book For 
Fundamentals Of Financial Accounting
ISBN: 9780073527109
3rd Edition
Authors: Fred Phillips, Robert Libby, Patricia A Libby
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