ACCT 5001 Exam 2 Questions and
Answers (Limited Edition) Correct
Solutions 2026-2027
disclosure that gives shareholders the ability to examine a
corporations through the eyes of management - Correct
Answers ✅MD&A (management discussion and analysis)
highest Net Income, most accurate replacement cost of
inventory - Correct Answers ✅FIFO
lowest Net Income, strategic advantage is lower taxes, most
recent cost matches most recent sale - Correct Answers
✅LIFO
lowest inventory - Correct Answers ✅LIFO
the difference between ending inventory computed using
FIFO (reflecting current replacement cost) and LIFO ending
inventory on the balance sheet - Correct Answers ✅LIFO
reserve
created over time by the LIFO reserve each year that
purchases/production are more than sales (when inventory
grows) - Correct Answers ✅LIFO layers
general rise in price levels, most commonly measured by
consumer price index, averages 4% - Correct Answers
✅inflation
,ACCT 5001 Exam 2 Questions and
Answers (Limited Edition) Correct
Solutions 2026-2027
lower inventory costs on balance sheet to high cost of goods
sold on income statement over time - Correct Answers
✅LIFO
lower cost of goods sold on income statement to higher
inventory costs on balance sheet over time - Correct
Answers ✅FIFO
LIFO yields lower inventory on the balance sheet and higher
cost of goods sold on the income statement than FIFO -
Correct Answers ✅under inflation
there is no DIRECT difference between FIFO and LIFO on
the ..... - Correct Answers ✅statement of cash flows
the cost of inventory on the balance sheet should be the
lower value of ______________________ or
________________________ for *FIFO, Avg Cost, or Specific
Identification* - Correct Answers ✅historical cost or net
realizable value
selling price of the product in ordinary course of business -
reasonably predicted costs of completion, disposal, and
transportation (commissions, shipping, etc) - Correct
Answers ✅NRV =
,ACCT 5001 Exam 2 Questions and
Answers (Limited Edition) Correct
Solutions 2026-2027
the net amount a company expects to realize from the sale of
the inventory - Correct Answers ✅NRV
the cost of inventory on the balance sheet should be the
lower value of ____________ or __________ for LIFO - Correct
Answers ✅historical cost or market value
the replacement cost, cant go above or below a certain
number, within a specific range - Correct Answers
✅market value
the cost the company historically paid - Correct Answers
✅historic cost
the cost to replace the item today, constrained by a valuation
"ceiling" and "floor" - Correct Answers ✅market cost
selling price - normal selling cost - Correct Answers
✅ceiling for market value= net realizable value=
ceiling for market value - normal profit - Correct Answers
✅floor for market value=
, ACCT 5001 Exam 2 Questions and
Answers (Limited Edition) Correct
Solutions 2026-2027
if the replacement cost is between the ceiling and the floor,
use the ______________ as the market cost - Correct Answers
✅replacement cost
If the replacement cost is lower than the floor, use the
________________ as the market cost - Correct Answers
✅floor
If the replacement cost is higher than the ceiling, use the
________________ as the market cost - Correct Answers
✅ceiling
After you determine the market cost, compare this to the
______________ and choose the _____________ of the two -
Correct Answers ✅historic cost
lower
value of the inventory on the books - Correct Answers
✅lower of cost or market
non-depreciable assets - Correct Answers ✅land
depreciable assets - Correct Answers ✅plant and
equipment
Answers (Limited Edition) Correct
Solutions 2026-2027
disclosure that gives shareholders the ability to examine a
corporations through the eyes of management - Correct
Answers ✅MD&A (management discussion and analysis)
highest Net Income, most accurate replacement cost of
inventory - Correct Answers ✅FIFO
lowest Net Income, strategic advantage is lower taxes, most
recent cost matches most recent sale - Correct Answers
✅LIFO
lowest inventory - Correct Answers ✅LIFO
the difference between ending inventory computed using
FIFO (reflecting current replacement cost) and LIFO ending
inventory on the balance sheet - Correct Answers ✅LIFO
reserve
created over time by the LIFO reserve each year that
purchases/production are more than sales (when inventory
grows) - Correct Answers ✅LIFO layers
general rise in price levels, most commonly measured by
consumer price index, averages 4% - Correct Answers
✅inflation
,ACCT 5001 Exam 2 Questions and
Answers (Limited Edition) Correct
Solutions 2026-2027
lower inventory costs on balance sheet to high cost of goods
sold on income statement over time - Correct Answers
✅LIFO
lower cost of goods sold on income statement to higher
inventory costs on balance sheet over time - Correct
Answers ✅FIFO
LIFO yields lower inventory on the balance sheet and higher
cost of goods sold on the income statement than FIFO -
Correct Answers ✅under inflation
there is no DIRECT difference between FIFO and LIFO on
the ..... - Correct Answers ✅statement of cash flows
the cost of inventory on the balance sheet should be the
lower value of ______________________ or
________________________ for *FIFO, Avg Cost, or Specific
Identification* - Correct Answers ✅historical cost or net
realizable value
selling price of the product in ordinary course of business -
reasonably predicted costs of completion, disposal, and
transportation (commissions, shipping, etc) - Correct
Answers ✅NRV =
,ACCT 5001 Exam 2 Questions and
Answers (Limited Edition) Correct
Solutions 2026-2027
the net amount a company expects to realize from the sale of
the inventory - Correct Answers ✅NRV
the cost of inventory on the balance sheet should be the
lower value of ____________ or __________ for LIFO - Correct
Answers ✅historical cost or market value
the replacement cost, cant go above or below a certain
number, within a specific range - Correct Answers
✅market value
the cost the company historically paid - Correct Answers
✅historic cost
the cost to replace the item today, constrained by a valuation
"ceiling" and "floor" - Correct Answers ✅market cost
selling price - normal selling cost - Correct Answers
✅ceiling for market value= net realizable value=
ceiling for market value - normal profit - Correct Answers
✅floor for market value=
, ACCT 5001 Exam 2 Questions and
Answers (Limited Edition) Correct
Solutions 2026-2027
if the replacement cost is between the ceiling and the floor,
use the ______________ as the market cost - Correct Answers
✅replacement cost
If the replacement cost is lower than the floor, use the
________________ as the market cost - Correct Answers
✅floor
If the replacement cost is higher than the ceiling, use the
________________ as the market cost - Correct Answers
✅ceiling
After you determine the market cost, compare this to the
______________ and choose the _____________ of the two -
Correct Answers ✅historic cost
lower
value of the inventory on the books - Correct Answers
✅lower of cost or market
non-depreciable assets - Correct Answers ✅land
depreciable assets - Correct Answers ✅plant and
equipment
