QUESTION 8

If a company overstates its ending inventory balance for 2017 by $10,000, and overstates its ending inventory balance for 2016 by $5,000 what are the effects on its net income for 2017 and 2016?

	A.	Effect on 2017 Net Income Effect on 2016 Net Income Overstated by $15,000 Overstated by $10,000
	B.	Effect on 2017 Net Income Effect on 2016 Net Income Understated by $5,000 Overstated by $10,000
	C.	Effect on 2017 Net Income Effect on 2016 Net Income Overstated by $5,000 Overstated by $5,000
	D.	Effect on 2017 Net Income Effect on 2016 Net Income Overstated by $10,000 Overstated by $5,000

1 points

QUESTION 9

Which of these is not an acceptable inventory costing method under IFRS?

	A.	FIFO
	B.	LIFO
	C.	Specific Identification
	D.	Average cost

1 points

QUESTION 10

A company lost all but $50 of its inventory in a fire on Feb. 22, 2017. The companys financial records are listed below:

2015 2016

Net Sales 10,000 12,300

COGS 6,500 7,995

Gross Profit 3,500 4,305

Operating Exp. 2,000 2,500

Net Income 1,500 1,805

For 2017 the companys records showed beginning inventory of $350, purchases of $500 and purchase returns of $90.

Net sales for the first part of the year totaled $1,000.

Determine the amount of inventory destroyed in the fire. (You must first calculate the companys historical gross profit percentage.)

	A.	$240
	B.	$360
	C.	$ 60
	D.	$150
	E.	$110