10 chapter 5 questions 8 if the unit cost of

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Chapter 5 Questions 8. If the unit cost of inventory has continuously increased, the ______________, first-out inventory valuation method will result in a higher valued ending inventory than if the ______________, first-out method had been used. 9. Under the LCM basis, market is defined as net ______________ price. 10. ____________ turnover is calculated as cost of goods sold divided by average inventory. Short-Answer Essay Questions Question 1 The periodic and the perpetual inventory systems are two inventory sytems that companies use to account for inventories. Briefly describe the major features of each system and explain why a physical inventory count is necessary under both systems.
Question 2 FIFO and LIFO are two cost flow assumptions made in costing inventories. The amounts assigned to the same inventory items on hand may be different under each cost flow assumption. If a company has no beginning inventory, explain the difference in ending inventory values under the FIFO and LIFO cost bases when the price of inventory items purchased during the period have been (1) increasing, (2) decreasing, and (3) remained constant. 11

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