Chapter 9 - Chapter 9 1. The term market in the phrase...

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Chapter 9 1. The term market in the phrase "lower of cost or market" generally means the: A. ceiling. B. floor. C. net realizable value. D. replacement cost. 2. The lower limit (floor) for inventory valuation is defined as the selling price less: A. a normal profit margin. B. estimated costs of completion and disposal. C. estimated costs of completion and disposal and a normal profit margin. D. the net realizable value. 3. If the replacement cost of an inventory item is less than the floor value but higher than its cost, the inventory item would be valued at: A. the ceiling value. B. cost. C. the floor value. D. replacement cost. 4. The most common method of applying the lower of cost or market rule is by: A. an item-by-item basis. B. major categories. C. individual categories. D. total inventory. 5. 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: A. allowance method. B. direct method. C. indirect method. D. replacement method. 6. Inventories of certain minerals and agricultural products are valued at:
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A. cost. B. lower of cost or market. C. net realizable value. D. replacement cost. 7. The relative sales value method is used throughout the: A. agricultural products industry. B. meat-packing industry. C. mining industry. D. petroleum industry. 8. Losses on noncancelable purchase contracts should be recognized: A. at the date of inception. B. at the time of payment. C. when the purchase is recorded. D. in the period a decline in market price occurs. 9. An estimated loss on purchase commitments is reported: A. as a current liability. B. as an extraordinary item. C. under Other Expenses and Losses.
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This note was uploaded on 12/09/2011 for the course ACC 371 taught by Professor Proscott during the Spring '11 term at S. Alabama.

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Chapter 9 - Chapter 9 1. The term market in the phrase...

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