alleryStart learning →When purchase prices rise, FIFO compared with LIFO reports
ANo closing stock
BHigher gross profit
CThe same stock value
DLower gross profit
Answer & Solution
Correct answer: B. Higher gross profit
FIFO charges the older, cheaper units to cost of goods sold, so its cost is lower and its gross profit higher.
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Net income is also calledCharging depreciation on fixed assets has what effect on net profit?Rs 36,000 rent for 12 months is received on 1 January. At the 31 March year end, unearned Investment interest of Rs 12,000 a year is received for nine months only. Accrued income aMachine costing Rs 2,00,000 is bought on 1 October; depreciation 15% a year on cost, year Current assets are Rs 4,80,000 and current liabilities Rs 3,10,000. Net current assets arePurchases Rs 4,00,000, purchase returns Rs 25,000, carriage inwards Rs 5,000. Net cost of Gross sales Rs 6,40,000 and sales returns Rs 15,000. Net sales are