ACC 304 Practice Test Chapter 9.docx - Answer Close...

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Answer Close Practice Question 1 The method of recording inventory at market that substitutes the market value for cost and reports the loss as a part of cost of goods sold is the: allowance method. indirect method. direct method. replacement method. Practice Question 2 Correct! To preclude overstating assets, the lower of cost or market (future utility) is used for
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inventory valuation. The primary basis of accounting for inventories is cost. A departure from the cost basis of pricing the inventory is required where there is evidence that when the goods are sold in the ordinary course of business their future utility will be less than their cost. replacement cost will be more than their net realizable value. cost will be less than their replacement cost. selling price will be less than their replacement cost. Practice Question 2 Correct! To preclude overstating assets, the lower of cost or market (future utility) is used for inventory valuation.
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The primary basis of accounting for inventories is cost. A departure from the cost basis of pricing the inventory is required where there is evidence that when the goods are sold in the ordinary course of business their future utility will be less than their cost. replacement cost will be more than their net realizable value. cost will be less than their replacement cost. selling price will be less than their replacement cost. Answer Close Practice Question 3 In applying Lower-of-Cost-or-Market, the designated market value is
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net realizable value less a normal profit margin. the higher of replacement cost or net realizable value less a normal profit margin. the lower of net realizable value or replacement cost. the middle value of replacement cost, net realizable value and net realizable value less a normal profit margin.
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  • Winter '16
  • Dr.Beard

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