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CHAPTER 8 VALUATION OF INVENTORIES: A COST-BASIS APPROACH IFRS questions are available at the end of this chapter. TRUE-FALSE —Conceptual Answer No. Description T 1. Work-in-process inventory. F 2. Merchandising and manufacturing inventory accounts. F 3. Perpetual inventory system. F 4. Determining when title passes. T 5. Inventory errors. T 6. Overstatement of purchases and ending inventory. F 7. Period vs. product costs. T 8. Reporting Purchase Discounts Lost. F 9. Cost flow assumption. T 10. FIFO periodic vs. perpetual system. T 11. Purchase commitments. F 12. Using LIFO for reporting purposes. F 13. LIFO liquidation. T 14. LIFO liquidations. T 15. Dollar-value LIFO F 16. Dollar-value LIFO method. F 17. LIFO-FIFO comparison. T 18. LIFO conformity rule. F 19. Selection of inventory method. T 20. Appropriateness of LIFO. MULTIPLE CHOICE —Conceptual Answer No. Description c 21. Identify manufacturer inventory similar to merchandise inventory. b 22. Classification of raw materials. b 23. Accounts included in inventory. a 24. Reason inventories are included in net income computation. c 25. Characteristic of perpetual inventory system. a 26. Reporting consignment inventory in balance sheet. d 27. Reporting goods in transit purchased f.o.b. destination. b 28. Effect of inventory error on net income. b 29. Effect of goods in transit on the current ratio. c 30. Description of consigned inventory. d 31. Entries under perpetual inventory system. b 32. Classification of goods in transit. a 33. Classification of goods in transit.
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