INVENTORIES - INVENTORIES: ADDITIONAL VALUATION ISSUES...

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Unformatted text preview: INVENTORIES: ADDITIONAL VALUATION ISSUES TRUe-FALSeConceptual Answer No. Description T 1. When to use lower-of-cost-or-market. F 2. Lower-of-cost-or-market and conservatism. F 3. Purpose of the floor in LCM. T 4. Lower-of-cost-or-market and consistency. F 5. Reporting inventory at net realizable value. T 6. Valuing inventory at net realizable value. T 7. Valuation using relative sales value. F 8. Definition of a basket purchase. F 9. Recording purchase commitments. T 10. Loss on purchase commitments. F 11. Recording noncancelable purchase contract. T 12. Gross profit method. F 13. Gross profit percentage. T 14. Disadvantage of gross profit method. F 15. Conventional retail method. F 16. Definition of markup. T 17. Accounting for abnormal shortages. F 18. Computing inventory turnover ratio. T 19. Average days to sell inventory. T 20 LIFO retail method. Multiple ChoiceConceptual Answer No. Description d 21. Knowledge of lower-of-cost-or-market valuations. d 22. Appropriate use of LCM valuation. c 23. Definition of "market" under LCM. b 24. Definition of "ceiling." a 25. Definition of "designated market value." c 26. Application of lower-of-cost-or-market valuation. d 27. Effect of inventory write-down. d S28. Recording inventory loss under direct method. c S29. Recording inventory at net realizable value. b 30. Net realizable value under LCM. d 31. Definition of "net realizable value." a 32. Valuation of inventory at net realizable value. d 33. Appropriate use of net realizable value. a 34. Material purchase commitments. a 35. Loss recognition on purchase commitments. b P36. Reporting purchase commitments loss. Multiple ChoiceConceptual (cont.) Answer No. Description d S37. Gross profit method assumptions. d 38. Appropriate use of the gross profit method. b 39. Appropriate use of the gross profit method. d 40. Advantage of retail inventory method. c 41. Conventional retail inventory method. a 42. Assumptions of the retail inventory method. d 43. Appropriate use of the retail inventory method. b 44. Markdowns and the conventional retail method. a 45. Markups and the conventional retail method. b *46. Knowledge of the cost ratio for retail inventory methods. a S47. Information needed in retail inventory method. d S48. Reasons for using retail inventory method. b P49. Inventory cost flow assumptions. a P50. Computing average days to sell inventory. c 51. Inventory turnover ratio. c *52. Dollar-value LIFO retail method. Multiple ChoiceComputational Answer No. Description a 53. Value inventory at LCM. b 54. Lower-of-cost-or-market. b 55. Lower-of-cost-or-market. c 56. Determining net realizable value. c 57. Determining net realizable value. b 58. Relative sales value method....
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This note was uploaded on 11/30/2011 for the course ACCOUNTING 101 taught by Professor Smith during the Spring '11 term at CUNY Baruch.

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INVENTORIES - INVENTORIES: ADDITIONAL VALUATION ISSUES...

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