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The Bayside Company uses the LIFO cost flow method to value inventory. In the current year, profit at Bayside is running unusually high. The corporate tax rate is also high this year but it is scheduled to decline significantly next year. In light of this information, the president of Bayside instructs the purchasing department to make a large purchase of inventory for delivery 3 days before the end of the year. The price of the inventory to be purchased has doubled during the year. QUESTION 1 What would be the effect of this transaction on this year’s net income? a. The net income could increase. b. The net income could decrease. c. There would be no effect on net income d. There is not enough information to determine if there would be an effect. QUESTION 2 What would be the effect of this transaction on this year's income tax expense? a. The income tax expense could increase. b. The income tax expense could decrease c. There would be no effect on income tax expense. d. There is not enough information to determine if there would be an effect. QUESTION 3 If Bayside had been using the FIFO cost flow method to value inventory instead of the LIFO cost flow method, would the president have given the same directive? a. Yes, the president would have given the same directive. The effect on net income and the income tax expense would have been the same. b. Yes, the president would have given the same directive. There would have been no effect on net income or the income tax expense. c. No, the president would not have given the same directive. There would have been an opposite effect on net income and the income tax expense. d. No, the president would not have given the same directive. There would have been no effect on net income or the income tax expense. QUESTION 4 The president's actions are an example of "earnings management." Which of the following statements about earnings management is false? a. Earnings management is illegal. b. Earnings management can sometimes have a negative side effect (e.g., the company may not be able to pay for the additional inventory). c. Earnings management can sometimes be considered to be unethical. d. None of these statements is false.
If a customer payment data was lost and needed to be reconstructed what are some of the ethical considerations the business owner would need to consider? This may include internal
Q. Illustrate perpetual inventory procedure? Data from Exhibit serves like the basis for some of the entries. You would debit the Merchandise Inventory account to record the en
An inflated budgeted expense account
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The analysis focused primarily on the role, structure and funding arrangements for the International Accounting Standards Board (IASB), an entity that has been responsible for majo
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Go to http://moneycentral.msn.com and look up the companies Lowe’s (symbol: LOW) and Home Depot (symbol: HD). To the left, you will see several different tabs. At the bottom, yo
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