Question

question 7 (3 points)
lifo provides an up - to - date ending inventory on the income statement because it uses the latest purchases to calculate ending inventory.
true
false
question 8 (3 points)
merchandise inventory is recorded on the:
balance sheet.
statement of owners equity.
income statement.
none of these is correct.
question 9 (3 points)
a company purchased new machinery and incurred freight, assembly, and installation costs in addition to the invoice cost of the machinery. these additional costs should be debited to:
miscellaneous expense.
machinery.
installation expense.
machinery expense.

Explanation:

Question 7

LIFO (Last - In, First - Out) uses the latest costs for cost of goods sold, not for ending inventory. FIFO (First - In, First - Out) provides an up - to - date ending inventory as it uses the oldest costs for cost of goods sold and the latest costs for ending inventory.

Merchandise Inventory is an asset. Assets are recorded on the Balance Sheet. The Statement of Owner's Equity shows changes in owner's equity, and the Income Statement shows revenues and expenses.

When a company purchases machinery, all costs necessary to get the machinery ready for its intended use (such as freight, assembly, and installation costs) are capitalized. Capitalized costs are added to the cost of the asset (Machinery in this case). Expenses like Miscellaneous Expense, Installation Expense (if not capitalized), and Machinery Expense (if it was a revenue - based expense) are not the correct accounts.

Answer:

False

Question 8