The use of the lower of cost or market method of

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Financial Accounting: The Impact on Decision Makers
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Chapter 5 / Exercise 4
Financial Accounting: The Impact on Decision Makers
Norton/Porter
Expert Verified
32.The use of the lower-of-cost-or-market method of inventory valuation increases net income for the period in which the inventory replacement price declined.
PTS:1DIF:ModerateOBJ:07-06NAT:AACSB Analytic | AICPA FN-Measurement | ACBSP-APC-17-Inventories Reporting33.The lower-of-cost-or-market method of determining the value of ending inventory can be applied on an item by item, by major classification of inventory, or by the total inventory.
PTS:1DIF:EasyOBJ:07-06NAT:AACSB Analytic | AICPA FN-Measurement | ACBSP-APC-17-Inventories Reporting34.When merchandise inventory is shown on the balance sheet, both the method of determining the cost of the inventory and the method of valuing the inventory should be shown.
PTS:1DIF:ModerateOBJ:07-06NAT:AACSB Analytic | AICPA FN-Measurement | ACBSP-APC-17-Inventories Reporting35.Most large companies will use only one inventory costing methods for all of its different segments.
PTS:1DIF:EasyOBJ:07-06NAT:AACSB Analytic | AICPA FN-Measurement | ACBSP-APC-17-Inventories Reporting36.Direct disposal costs do not include special advertising or sales commissions.
PTS:1DIF:ModerateOBJ:07-06NAT:AACSB Analytic | AICPA FN-Measurement | ACBSP-APC-17-Inventories Reporting37.Inventory errors, if not discovered, will self-correct in two years.
PTS:1DIF:EasyOBJ:07-06NAT:AACSB Analytic | AICPA FN-Measurement | ACBSP-APC-17-Inventories Reporting38.Generally, the lower the number of days' sales in inventory, the better.
PTS:1DIF:ModerateOBJ:07-07NAT:AACSB Analytic | AICPA FN-Measurement | ACBSP-APC-17-Inventories Reporting39.One negativeeffect of carrying too much inventory is risk that customers will change their buying habits.
PTS:1DIF:EasyOBJ:07-07NAT:AACSB Analytic | AICPA FN-Measurement | ACBSP-APC-17-Inventories Reporting40.Average inventory is computed by adding the inventory at the beginning of the period to the inventory at the end of the period and dividing by two.
PTS:1DIF:EasyOBJ:07-07NAT:AACSB Analytic | AICPA FN-Measurement | ACBSP-APC-17-Inventories Reporting
We have textbook solutions for you!
The document you are viewing contains questions related to this textbook.
Financial Accounting: The Impact on Decision Makers
The document you are viewing contains questions related to this textbook.
Chapter 5 / Exercise 4
Financial Accounting: The Impact on Decision Makers
Norton/Porter
Expert Verified
41.Inventory turnover measures the length of time is takes to acquire, sell and replace the inventory.
PTS:1DIF:EasyOBJ:07-07NAT:AACSB Analytic | AICPA FN-Measurement | ACBSP-APC-17-Inventories Reporting42.In the retail inventory method, the cost to retail ratio is equal to the cost of goods sold divided by the retail price of the good sold.
PTS:1DIF:ModerateOBJ:07-APPNAT:AACSB Analytic | AICPA FN-Measurement | ACBSP-APC-17-Inventories Reporting

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