See-Saw Ltd uses moving weighted average for its inventory,which is valued at $276 000.It is considering a change to FIFO,which would decrease the valuation to $245 000.Which of the following would be increased by the change?

Question

Quizplus · Accepted Answer

The change from moving weighted average to FIFO would decrease the valuation of inventory by $31,000, which means it would reduce the cost of goods sold by the same amount. Therefore, the cost of goods sold for the period would be lower, resulting in a higher gross profit and ultimately higher retained profits. Income tax payable and sales are not directly affected by the change in valuation method.

See-Saw Ltd Uses Moving Weighted Average for Its Inventory,which Is