ACG 3131 Test 4 Study Guide 1. Lower of Cost or Market: Both conceptual and computational. Understand difference between ceiling, floor and market. 2. Purchase commitments-how treated for income statement vs balance sheet 3. Gross Profit Method-calculated as both % of sales and % of sales. Understand relationship between gross profit, sales and cost of sales. 4. Retail Inventory Method and relationship to lower of cost or market. Inclusion of markups in computation is equivalent to what accounting valuation Inclusion of markdowns along with markups in computation is equivalent to what accounting valuation. 5. Impact of each inventory method on financial statements and when permitted 6. Lump sum purchases of inventory items and computation of gross profit
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