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Unformatted text preview: C HAPTER 9 Cost of Goods Sold and Inventory: Estimation and Noncost Valuation M ULTIPLE C HOICE Q UESTIONS Theory/Definitional Questions 1 Reporting a purchase commitment 2 Assumptions of gross profit method 3 Usefulness of gross profit method 4 Constraint of the gross profit method 5 Relationship between ending inventory and net income 6 Relationship between ending inventory and net income 7 Relationship between ending inventory and net income 8 Retail inventory methodinclusion of freightin 9 Uses of the gross profit method 10 Items included in goods available for sales under retail inventory 11 Understating ending inventory in COGS calculation 12 Relationship between ending inventory and net income 13 Advantages of the retail method 14 Characteristics of retail inventory method 15 Assumptions of the retail method 16 Calculating the cost ratio to be used with retail inventory method 17 Net realizable value 18 Net realizable value 19 Relationship of markups on cost and on selling price 20 Reporting decline in value of noncancellable purchase contract 21 Dollarvalue LIFO retail and an incremental layer 22 Treatment of net markups and markdowns under retail method 23 Current rate defined by exchange rate 24 Replacement cost of inventory under the lower of cost or market method 25 When net realizable value is appropriate for inventory valuation 26 Lower of cost or market method 27 Lower of cost or market method 28 Current replacement cost as general meaning for "market" 29 Method for inventory costing needs to be disclosed 30 Relationship between cost ratio retail inventory method and the estimated 63 64 Chapter 9 Cost of Goods Sold and Inventory: Estimation and Noncost Valuation cost of ending inventory Computational Questions 31 Computation of ending inventory 32 Computation of ending inventory using the gross margin method 33 Computation of estimated inventory balance given gross margin 34 Computation of cost of goods sold and operating profit 35 Estimate cost of goods sold under gross profit method 36 Computation of estimated costs of missing inventory 37 Computation of loss due to theft 38 Computation of estimated inventory loss due to fire 39 Computation of LCM value for inventory 40 Computation of cost of goods available for sale 41 Recording of raw materials 42 Computation of LCM value for inventory 43 Computation of ending inventory at cost using retail method 44 Computation of estimated inventory at lower of cost or market using retail method 45 Computation of unit price using lower of cost or market 46 Computation of unit price using lower of cost or market 47 Computation of ending inventory using LIFO retail 48 Computation of inventory under dollarvalue LIFO retail method 49 Computation of cost component of LCM 50 Computation of market component of LCM 51 Computation of inventory value under LCM 52 Computation of exchange gain/loss 53 Computation of exchange gain/loss 54 Computation of estimated inventory balance given gross margin...
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This note was uploaded on 11/01/2011 for the course ACC 200 taught by Professor Minliu during the Spring '11 term at Universidad Europea de Madrid.
 Spring '11
 MinLiu
 Accounting

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