Did Karen make an good ethical choice by changing to FIFO

Assignment Help Accounting Basics
Reference no: EM132920987

Question - Karen's Dress Boutique is a retail store that sells vintage apparel and accessories. The store is in its third year of operations and is struggling financially. Part of the problem is that the cost of inventory has increased dramatically over the past two years. The store assigns inventory costs using LIFO. A loan agreement with the bank requires the store to maintain a certain profit margin. Karen is reviewing the current year financial statements and sees that results are not favorable. The only way that the store can meet the required profit margin is to change inventory costing from LIFO to FIFO. Karen redoes the financial statements using FIFO and submits them to the bank without disclosing the change.

1. How is it that FIFO improves the profit of the Dress Boutique?

2. Did Karen make an good ethical choice by changing to FIFO? Why or why not?

3. What alternative(s) did Karen have in this situation?

Reference no: EM132920987

Questions Cloud

Compute how much is earned : Compute how much is earned within and/or earned outside the Philippines from each of the following independent cases rey earned 100,000 interest income
Practical connection assignment : At UC, it is a priority that students are provided with strong educational programs.
What is the current value of one share of bell weather co : The company is planning on increasing its annual dividend by 15%. What is the current value of one share if the required rate of return is 10%?
Creating a research plan to decide upon a talent acquisition : Creating a research plan to decide upon a talent acquisition tool as well as an implementation plan to put it in place - Systemize the entire recruitment proces
Did Karen make an good ethical choice by changing to FIFO : A loan agreement with the bank requires the store to maintain a certain profit margin. Did Karen make an good ethical choice by changing to FIFO
What is probability that investor in stock will not lose : What is the probability that an investor in this stock will NOT lose more than 8% nor earn more than 21% in any one given year?
What percentage of the portfolio should be invested : The risk level of the portfolio is equivalent to the risk level of the overall market. What percentage of the portfolio should be invested in Treasury bills?
Major differences between credit and debit card : What are the major differences between credit and debit card and how each can impact our finances and what are the various fees attached to both types of cards?
Analyze what role hr professionals can play : Analyze what role HR professionals can play to influence a healthy and balanced workplace culture for both union and nonunion employees

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have over this longer real rate?

  Coures:- fundamental accounting principles

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd