Version 1

Project 1.Process and Develop Budget

Project Information
Case I
ABC Company’s planning budget for the third quarter are shown below:
July August September Total
Budgeted Sales on account Br 600,000 Br 900,000 Br 500,000 Br 2,000,000
From past experience, the company has learned that 20% of a month’s sales are collected in the
month of sale, another 70% are collected in the month following sale and the remaining 10% are
collected in the second month following sale. May sales totaled Br 430,000 and June sales
totaled Br, 540, 000.
Required
Task 1. Prepare a schedule of expected cash collections from sales, by month and in total, for the
third quarter.
Task 2. Compute the accounts receivable as September 30.
Process Job order costing
Project 2 Information
The following selected data are taken from Rich Company for the month of November 2022.
Direct Material Inventory: November 1, 2022………………. 105,000
Direct Materials Purchase …………………………………. 365,000
Direct Materials used ………………………………………. 385,000
Total Manufacturing overhead costs………………………… 450,000
Variable Manufacturing Overhead Costs…………………….. 265,000
Total Manufacturing costs incurred during November 2022……1,610,000
Work in Process inventory: November 1, 2022………………… 230,000
Cost of Goods Manufactured……………………………………. 1,660,000
Finished Goods Inventory: November 1, 2022..…………………. 130,000
Cost of Goods Sold……………………………………………… 1,770,000
Instruction: Under this project the candidate is expected to perform the tasks based on the
information provided.
Task 1.Direct Materials inventory on on November 30, 2022
Task 2.Fixed Manufacturing Overhead Costs for November, 2022
Task 3.Direct Manufacturing labor costs for November 2022
Task 4.Work in Process Inventory November 30, 2022
Task 5.Cost of finished Goods available for sale in November 2022
Task 6.Finished Goods inventory on November 30, 2022
Project 3 Information
KK Ethiopia Corporation opened the year 2020G.C, with the following trial balance information
 KK Ethiopia Corporation
Trial Balance
Jan, 1, 2020
Account Debit Credit
Cash 100,000
Account Receivable 300,000
Merchandise Inventory 254,000
Land
Account Payable 240,000
Loan payable 120,000
Capital stock 200,000
Returned Earning 440,000
Dividend
Revenue
Salary expense
Rent Expense
Supply Expense
Interest Expense
TOTAL
KK Ethiopia Corporation has the following data for the year of 2020 G.

Item January December

Account Receivable 430,000

Merchandise Inventory 162,000
Account Payable 238,000
Accrued Salary 134,000 145,000
Unearned Salary 17,000 28,000
Prepared Expense 11,000 16,000
Additional Information
Cash collected from customers during the period was 130,000
Cash paid for suppliers during the period was 44,000
Cash paid for operating expenses during the period was 34,000
Required
Task 1) Calculate the total sales income during the period Using both accrual and cash basis of
accounting
Task 2) Calculate the total purchases during the period using accrual and cash basis of
accounting.
Task 3) Calculate the total Cost of the goods sold during the period using both accrual and cash
basis of accounting
Task 4) Calculate the total Operating expenses during the period using both accrual and cash
basis of accounting.
Project 4
Hariri Municipality Approved and adopted the budget for the year 2014E.C On July 1. The
estimated Revenue from property tax is br. 4,200,000.00, interest and penalty br. 100,000.00and
license and permits br. 2,500,000.00, and the amount of authorization for appropriation for
general government is br. 2,500,000.00, public safety br. 2,400,000.00 and health and welfare br.
1,800,000.00:
Required
Task 1.Calculate the Fund Balance
Task 2.Make the necessary Journal entries Including the Subsidiary accounts
Project Information
Project Information
Project 5.
TEBABER Industrial PLC manufactures a high –quality, fertilizer, which is used primarily by
commercial vegetable growers, the following partial payroll data were taken from the firm’s payroll
records for the month of Hidar 2015 E.C
Basic salary over time
1 Alemu 18000.00 600.00
Megersa
2 Hiwot Abay 2700.00 300.00
3 Fana Hailu 5200.00 1400.00
4 Hayat 7800.00 1500.00
Mohammed
5 Tigist Desta 2200.00 1350.00

Additional information
A monthly house allowance of each employee is 11% of their basic salary.
Pension contribution 7% from employees and 11% from the Employer.
The employees are responsible to pay 10% of their basic salary for credit association
House allowance of each employee is non-taxable.
Transport allowance of each employee is ¼th of basic salary and of which in Excess of Birr 600 is
taxable

Instruction: Under this project the candidate is expected to perform the tasks based on the
information provided.
Version 2
Project one
Account Jan1 Dec31
Finished goods 10,000 30,000
Raw material 150,000 120,000
Work in process 118,000 122,000
Raw material purchase 284,000
Direct labor 236,000
Indirect labor used 47,000
Indirect labor 84,000
Other manufacturing cost 157,000
Sales 1,246,000
Salary expense 265,000
Administration expense 87,000
Calculate
Task 1:- total cost available for use
Task 2:- cost of raw material used
Task 3:- prime and conversion cost
Task 4:- cost of manufacturing
Task 5:- cost of goods sold
Process Job order costing
Project 2.Perform Accounting for Government and Not for Profit Entities
Project Information
Harari Municipality Approved and adopted the budget for the year 2014E.C On July 1. The
estimated Revenue from property tax is br. 2,500,000.00, interest and penalty br. 15,000.00and
license and permits br. 14,400.00, and the amount of authorization for appropriation for general
government is br. 1,500,000.00, public safety br. 600,000.00 and health and welfare br.
155,000.00: Required
Task 1.Calculate the Fund Balance
Task 2.Make the necessary Journal entries Including the Subsidiary accounts

Case II
Micro Corporation has budgeted sales of its microchips for next four month as follows:
Units Sold
April 20,000
May 25,000
June 35,000
.July 40,000
The company is preparing a production budget for the third quarter. Ending inventory level must
equal 20% of the next month’s sales.
Required
Task 1.Calculate the ending inventory as of March 31.

Task 2.Prepare a production budget for the third quarter by month and in total

Project 3

Name Year Reason week salary average daily

wage last

Mohammed 10 reduction of worker 5070 169

Mengistu 8.5 constrictive 3000 100
Temesgen 41 personal reason with 5340 178
progressive note
Halima 28 personal reason with 1800 60
progressive note

Task 1:- calculate total severance for each

Task 2:- record employee severance payment
Task 3:- record total employee of severance payment
Project 4
Project Information
KK Ethiopia Corporation opened the year 2020G.C, with the following trial balance information
KK Ethiopia Corporation
Trial Balance
Jan, 1, 2020
Account Debit Credit
Cash 100,000
Account Receivable 400,000
Merchandise Inventory 100,000
Land 400,000
Account Payable 240,000
Loan payable 120,000
Capital stock 200,000
Reatend Earning 440,000
Dividend
Revenue
Salary expense
Rent Expense
Supply Expense
Interest Expense
TOTAL 1,000,000 1,000,000
KK Ethiopia Corporation has the following data for the year of 2020 G.

Item January December

Account Receivable 480,000

Merchandise Inventory 362,000
Account Payable 238,000
Accrued Salary 334,000 245,000
Unearned Salary 47,000 38,000
Prepared Expense 41,000 36,000
Additional Information
Cash collected from customers during the period was 130,000
Cash paid for suppliers during the period was 44,000
Cash paid for operating expenses during the period was 34,000
Required
Task 1) Calculate the total sales income during the period Using both accrual and cash basis of
accounting
Task 2) Calculate the total purchases during the period using accrual and cash basis of
accounting.
Task 3) Calculate the total Cost of the goods sold during the period using both accrual and cash
basis of accounting
Task 4) Calculate the total Operating expenses during the period using both accrual and cash
basis of accounting.
Project 5
Hariri Municipality Approved and adopted the budget for the year 2014E.C On July 1. The
estimated Revenue from property tax is br. 4,200,000.00, interest and penalty br. 100,000.00and
license and permits br. 2,500,000.00, and the amount of authorization for appropriation for
general government is br. 2,500,000.00, public safety br. 2,400,000.00 and health and welfare br.
1,800,000.00:
Required
Task 1.Calculate the Fund Balance
Task 2.Make the necessary Journal entries Including the Subsidiary accounts
Project 6
July 15 2022 Harge company purchase supply general government 850,000, public safely
450,000 ,health and welfare 80,000.80% renewed has been September1 2022 order received July
15 and actual invoice received was 1,104,000 including general government 680,000 public
safety 360,000 and health welfare 64,000
Required
Task 1:- Record purchase July 15
Task 2:- Record payment September 1

Project 7
January 1:- begging inventory of purchase merchandise inventory 130unit @ br 9
February 2:- Purchase 160 units on credit at a cost of br 10 per unit
February 7:- Returned 30 defective unit that purchase supplies on feb 2
June 15:- purchase 240 unit of merchandizing for cash at br 9 per unit
September 6:- sold 240 units for cash at purchase a price of br 15 per unit. This 120 unit are from
begging inventory and 120 units from Feb. purchase
December 21:- 290 units are left on hand 40 unit from Feb. 2 purchases
Required
Task1:- Record general journal, adjusting entry and closing entry for periodic inventory.
Task2:- Record general journal, adjusting entry and closing entry for perpetual inventory.
Version 3
Project 1
1) ATO Alemu Deposit 2000 birr Awash bank for 10 years which 7% Annual Interest by
using compound interest per month?
2) ATO alemu invested 2000 birr per year which 9% earning per year what is the
accumulated investment after 10 years by using annuity interest?

Project 2
ABC company the first month operation
1) Raw material purchase -------------25,000,000
2) Direct Labor cost--------------------10,000,000
3) FOH-----------------------------------7,000,000
4) Selling and Admin expense--------2,000,000
 75% of raw materials purchased to used production
 60% of WIP completed
 80% completed jobs are sold
Required:- 1) compute the ending amount
 A. Raw Materials
B. Work in process
C. Finished Goods
D. Cost of goods sold
E. Selling and admin expense

Project 3
ABC company accepted A note for br 40,000 on march 12 it issuance date and 60 days a note
12% Interest.
A. What is the Maturity Day of the note
B. What is the value of maturity value
C. Record the issuance day and maturity day
Project 4
ABC company has record the following inventory information
 January 1. Inventory 200unit @ 9 birr
 January 3. Purchase 300 unit @ 10 birr
 January 7. Sold 200 @ 20 birr each
 January 13. Purchase 100 unit @ 11
 January 15. Sold 150unit @ 21 br each
 January 20. Purchase 100unit @ 12 br
 January 31. Sold 100 unit @ 22 br each

Physically count on hand 250 unit company use periodic in system and FIFO method all purchase
and sales on account.
Required:- A. record the transaction
B. calculate the gross profit
Project 5
 Identify the relevant document declaration of tax
 Role of national bank
 Type of account
 List financial intermediary other than bank
 What is financial market and importance
Project 6
ABC Company purchase computer equipment 100,000 br and sold it for br 75,000 total deprecation
for br 50,000.
A, what is book value
B, what is the gain amount
 Suppose the above information the computer equipment its commercial building both
deprecation and taxed the building sold 120,000 br
A. What amount of gain?
B. What is the amount of business income tax (30%)?
C. What is the amount of capital gain tax (15%)?
Project 7
ABC Company manufactures cost of 2 departments
A. Raw material purchase on account 2,500,000
B. Raw materials issues mixing department 500,000 and finishing department 300,000
C. Direct labor incurred cost mixing department 400,000 and finishing department 300,000
 D. Factory over head applied mixing department 400,000 and finishing department 205,000
E. Mixing department complete a process
F. Finished department receipt and complete of a jobs
Required
A. Record the necessary journal entry
Project 8
ABC Company purchased Equipment worth br, 80,000 on Hamle 1, 2011. It had a useful life of
10Years with no statement salvage value. The company depreciated the equipment using straight
line method and the accounting period is from Hamle 1 to Sene 30. The company decided to use
the revaluation model for valuing equipments in 2014 and at Hamle 1,2014 , the equipment was
valued at birr 70,000 by it professional valuators

Task 1:- show the initial recognition of the asset with Journal Entry.

Task 2:- Calculate depreciation expenses, the record journal entries and determine carrying
amount to be included in balance sheet report for the year 2012, 2013 and 2014.

Task 3 Compute Revaluation surplus Deficit on Hamle 1, 2014 and pass the necessary Journal
entry?

Version 4
Project 1
ABC Company purchased Equipment worth br, 80,000 on Hamle 1, 2011. It had a useful life of
10Years with no statement salvage value. The company depreciated the equipment using straight
line method and the accounting period is from Hamle 1 to Sene 30 . The company decided to use
the revaluation model for valuing equipments in 2014 and at Hamle 1,2014 , the equipment was
valued at birr 70,000 by it professional valuators

Task 1:- show the initial recognition of the asset with Journal Entry.

Task 2:- Calculate depreciation expenses, the record journal entries and determine carrying
amount to be included in balance sheet report for the year 2012, 2013 and 2014.

Task 3 Compute Revaluation surplus Deficit on Hamle 1, 2014 and pass the necessary Journal
entry?

Case Scenario 1

Zufan trading involves by importing spare part to assemble Bajaj in Addis Ababa city, Zufan
trading has imported spare parts from japan $ 500,000 as of May 10,2017 including $6% of
Transportation charge, fright 100,000 birr and insurance 20,000 birr

Task 1:- calculate the cost of raw material before transportation charge in birr
Task 2:- Determine excise (30 %) VAT (15 %) and custom duty (35 %) assume that all tax
liabilities are calculated on the cost of raw materials before transportation charge and (exchange
rate as of May 10,2017 was $1=25$ birr)

Task:-3 assume that zufan Trading faced shortage of cash at the end of the year and request
Dashen bank credit facility of 24 million birr to be paid with three years at equal settlement
quarterly at interest of 16% calculate the loan and interest expense paid at the end of the first
year

Project2: Process Payroll and Personal budgeting

Rift valley Company, an Ethiopian registered organization, pays the salary of its employee
according to the Ethiopian calendar month and pays overtime according to the new payment
system. The following information available for the month of sene 30,2013 :

Ato Habtamu Aman is an employee of the company starting from Hamle 1, 2008 E.C. as branch
manger. The company uses Ethiopian budget year (Hamle to Sene). The following are particulars
of Ato Habtamu Aman for the employment years: -

 The company paid to ato Habtamu the following amounts for the past five years:
o Basic salary per month …………………….br. 9,000
o Position allowance per month………..br. 1000
 Starting from Hamle 1, 2013 the company increased his basic salary and pos allowance
as follow: -
Basic salary per month…………………….…..br. 12,000
o Position allowance per month……………..br. 2000

Ato Habtamu is not entitled to any other taxable benefits during these years other than basic
salary and position allowance. Hint: Income tax is computed based on monthly salaries.

Task 1. On Hamle 30, 2013 E.C., Ato Habtamu has got his two months basic salary as a bonus
from his employer for his outstanding performance in the previous bud CALCULATE:

A. The amount of income tax on bonus and,

B. Net amount of bonus to be received by ato Habtamu

Project 3: Process Management Accounting Information System

Anbessa shoe factory sells shoes in Addis Ababa through its different shoe stores. It sells
different styles of the same shoes with identical unit costs and selling prices. Each store has a
store manager and a store supervisor who are paid a fixed salary. Shoes are sold by sales persons
who receive a fixed salary and a sales commission. Anbessa Shoe Factory is considering opening
another store at Adam City that is expected to have the revenue and cost relationships shown
here:
 Variable date per pair of shoes Annual fixed cost
Selling price br 1,500 Rent br. 200,000
Cost incurred for shoes br.880 Salaries br.300,000
Sales commission br.100 Advertising br.60,000
Other fixed cost br.40,000
Total br.600,000

Instruction: you are expected to provide the following management accounting information
(cost volume profit report)

Task 1: Determine the breakeven point in units (pair of shoes)

Task2: Determine the break even revenues

Task 3: It 800 units are sold, what will be the operating income loss) of the newly proposed
shoes store? Task 4: Assume fixed salaries are increased by a total of birr 65,000 and sales
commissions are discontinued, what would be the annual break-even point in (i) units sold and
(ii) revenues?

Project 4: Process Cost and Operational Budget

East Africa Company is manufacturing business which produces and sold wearing apparel to its
existing and new customers. The company is preparing budgets for the quarter ending Meskerem
30, 2016. The budgeted year of the company is from Hamle to sene 30 . The management of the
company provides the following information for the preparation of the first quarter budget:

1. Budgeted sales for the next four months will be:

Hamle…….. 2,000 units Nehase…………… 5,000 units

Meskerem.....3,000 units Tikimt…………….. 2.500 units

2. The selling price is br. 100 per unit.

3. The company's collection pattern is 55 % of sales collected in the month of sale, 42%
collected in the month following sale, 3% is uncollectible.

4. The Sene 30,2015 accounts receivable balance of birr 30,000 will be collected in full.

5. The management at the Company wants ending inventory to be equal to 30% of the following
month's budgeted sales in units. On Sene 30, 2015, 1,000 units were on hand,
Instruction: Under this project the candidate is expected to perform the tasks based on the
information provided.

Task 1: Prepare the sales (revenue) budget for each month and the quarter end Meskerem 30,
2016. Task 2: Prepare expected cash collection budget

Task 3: Prepare production budget

Case Scenario II

People and organizations wanting to borrow money are brought together with those having
surplus funds in the financial markets. Markets is plural; there are a great many different
financial markets in a developed economy and developing economy such as ours,

Task 1. Mention financial intermediaries in Ethiopia economy.

Task 2. Demonstrate instruments traded on short term money market and Capital market.

Case scenario llI

Job No. 10 Passes through the department A and B the following information is given
prepreding this job.

Department
A B
Material issued to job 8,000 1,000
Direct labor hours for job 1,000 2,000
Rate of direct labor per hour 1 1.5
Sale of scrap material 1,000 150
arising from job
Total overhead for the 10,000 15,000
department
Total labor hour for the 10,000 30,000
department

Task: 1 Calculate the cost of the Job No. 10 from the above figures. Assume the overhead cost is
computed based on total laborers used in the department

project5: Process Financial Transactions

As of sene 1, 2015, Rift Valley Company, decided that establishing a petty cash fund would be
more efficient way to handle small day-to-day reimbursements and also depositing cash
collecting in a bank and making large disbursements on check are efficient ways of control cash
receipts and payments.

Below is a list of petty cash transactions of the company during Sene, 2015:

Sene 3, Prepared and cashed a br 10,000 cheque to establish the petty cash fund for the first time.

Sene 8, purchase some office supplies for br. 3500 for immediate use.

Sene14, Reimbursed an employee br. 1,400 for travel expenses to attend an out of town meet
Ingat Adama City.

20, Paid br. 3200 to DHL to deliver documents to a customer.

26, Paid br. 1,500 for postage to cover postage needs for the next 2 months.

30. Cheeked the petty each and realized that it needed to be replenished so a cheque was
issued to replenish the fund and increase it to br, 12,000. Petty cash currency was Counted and
totaled br. 500 .

TASK 1: Prepare journal entries with dates related to establishment of petty cash and
replenishment of petty cash based on the items above.

Version 5

Project One

Belgium PLC paid Birr 3000 on November 2014 for Vat liability. The company’s sales is Birr
1,541,000 Vat inclusive .the company also Paid 6,000 as an Employment income tax for the
month. The administrative expenses of Plc. are Birr 15,000.
Task 1.1 Calculate direct tax liability of the company as of October?
Task 2.2 Calculate vat input and vat output?

Case Scenario II Process Payroll and Personal budgeting

Rift valley Company, an Ethiopian registered organization, pays the salary of its employee
according to the Ethiopian calendar month and pays overtime according to the new payment
system. The following information available for the month of sene 30, 2013:
Ato Habtamu Aman is an employee of the company starting from Hamle 1, 2008 E.C. as branch
manager. The company uses Ethiopian budget year (Hamle to Sene). The following are
particulars of Ato Habtamu Aman for the employment years: -
 The company paid to Ato Habtamu the following amounts for the past five years:
o Basic salary per month …………………….br. 9,000
o Position allowance per month………..br. 1000
  Starting from Hamle 1, 2013 the company increased his basic salary and pos allowance
as follow: -
Basic salary per month…………………….…..br. 12,000
o Position allowance per month……………..br. 2000
Ato Habtamu is not entitled to any other taxable benefits during these years other than basic
salary and position allowance. Hint: Income tax is computed based on monthly salaries.
Task 1. On Hamle 30, 2013 E.C., Ato Habtamu has got his two months basic salary as a bonus
from his employer for his outstanding performance in the previous bud
CALCULATE:
C. The amount of income tax on bonus and,
D. Net amount of bonus to be received by Ato Habtamu
E. The net amount of severance pay Ato Habtamu received.
Project Two
DL Hotel present loan proposal to Dashen bank and the Bank provides three credit shames to
the loan. The first option is to borrow birr 230,000 mortgage to be paid with 8 years at equal
installment at the rate of 15% Sami- annually. The second and third option are to borrow birr
450,000 for 30 months at equal installments at rate of 13% at semi-annually and birr 300,000 for
a year at equal installments at rate of 12.5% semi-annually respectively. The bank agreed with
the company and the loan disbursed with additional service charge of birr 27,500 (one time
borrowing cost for the three loans).
Required
Task 2.1 Calculate interest expenses and other charges at the end of first year for each option
Task 2.2 Calculate total loan repaid at the end of second year for each option
Task 2, 3 Demonstrate document required to open bank account at Dashen bank by the hotel
Task 2, 4 what is the advantage of credit facility?

Project Three
Partners of Roman, Sara and Tigest have conducted business together for a number of years they
divide all profits and losses in the ratio is Roman 40%, Sara 35% and Tigest 25%after
discounting the ordinary business operation of their partnership and closing the account on
September 2002, they decided to wind up the partnership by collecting their receivable and
selling all the remaining assets of the business. A summarizing by balances sheet of the
partnership on this data is show below.
Roman, Sara, and Tigest
Trial Balance
Sep 1, 2002
Debits Credits
Cash Birr 10,000
 Other assets 90,000
Liabilities Birr 10,000
Roman, capital 30,000
Sara, capital 30,000
Tigest, capital 30,000

Total Birr 100,000 Birr 100,000

Required: -Based on those facts accounting for liquidation of partnership assuming the following
assumption
A. Non cash asset were sold for Br 95,000
B. Non cash asset were sold for Br 70,000
C. Non cash asset were sold for Br 12,000
Required
A. Prepare statement of partnership liquidation September, 2002.
B. Pass the necessary journal entries for partnership liquidation by their assumption
 The sales of the assets
 The division of loss on the sales of assets
 The payment of the liability
 The distribution of cash to the partner
Case Scenario II
Assume that the budget committee of Gerdie Company is preparing the merchandise
purchases budget for July 2011. Gerdie Company has the following information
Month Budgeted Sales

March $50,000

April 53,000

May 51,000

June 54,500

July 52,500

In addition, the gross profit rate is 40% and the desired inventory level is 30% of next month's
cost of sales.

Required:
Task 1 Prepare a purchase budget for April through June.
Project Five
Suppose you are account officer of Alem plc. among the tasks and responsibilities listed on your
job description are to handle issues related to financial services sector, to create relationship with
concerned body and to process customer accounts and transaction 0f your organization.
Task 1. Demonstrate possible documents required to open current bank account in Awash bank
Task 2. What is secondary Market?
Task 3. What is primary Market?
Task 4. What is Capital market and money Market?
Task 5 Documents required to open current account includes:-
 Trade license
 Tin (tax identification number)
 Memorandum of association
 Minute of meeting of board of director
 Held to discuss opening account
 Initial amount of deposit
Task 6. What is the advantage of credit for firms extended by banks like for XY PLC?
Advantage of credit facility
 It serves as working capital
 It can make smooth flow of money through the economy.
 It serves as business expansion and addition of new business
 It minimizes liquidity problem
 it can make cashier to purchase thing
 it can improve family level of living
Task 7 What are the Instruments traded on the short-term money market?
Project Six
COMPARISION OF INVENTORY COSTING METHODS
If the cost of units and prices at which they are sold remains stable, all the four methods yield the
same results. But if prices change, the three methods usually yield different amounts for:
- Ending inventory
- Cost of merchandise sold
- Gross profit or net income
In periods of rising (increasing) prices: (or if there is inflationary trend):
FIFO yields – higher ending inventory
_ Lower cost of merchandise sold
_ Higher gross profit (net income)
LIFO yields _ Lower ending inventory
_ Higher cost of merchandise sold
_ Lower gross profit (net income)
  Weighted average yields the results between the two.
In periods of declining (decreasing) prices:
FIFO yields _ Lower ending inventory
_ Higher cost of merchandise sold
_ Lower gross profit or net income
LIFO yields_
yields_ higher ending inventory
_ Lower cost of merchandise sold
_ Higher gross profit or net income
 Weighted average- between the two
 FIFO: Results in higher net income and lower taxable income because it uses older,
cheaper inventory for COGS.
 LIFO: Results in lower net income and higher taxable income because it uses more
recent, higher-cost inventory for COGS
Impact of cost of goods sold and net income

COGS Net income Which one

Raising(increase) FIFO A C 1. LOW COGS
Raising(increase) LIFO B D 2. High COGS
Decreasing(Decline) FIFO E G 3. LOW Net income
Decreasing(Decline) LIFO F H 4. High Net income
5. No changed
Case Scenario II
Beginning inventory …………………240 birr
Feb 10 purchased ………………….....400 birr
March 3 purchase …………………….300 birr
April 7 purchase ……………………..250 birr
May 9 purchase………………………750 birr
June sold ………………….3 Tips sold
Required
Task 1 assume that the company used LIFO costing methods calculate COGS and cost of ending
inventory
Task 2 assume that the company used WAM costing methods calculate COGS and cost of
ending inventory