8. Intermediate Accounting Chapter 8 well answered rated A+

8. Intermediate Accounting Chapter 8Average cost method - correct answer The average cost method assumes that items sold and items in ending inventory come from a mixture of all the goods available for sale. Consignment - correct answer Goods held on consignment are included in the inventory of the consignor until sold by the consignee. f.o.b. (free on board) shipping point - correct answer Inventory shipped f.o.b. shipping point is included in the purchaser's inventory as soon as the merchandise is shipped. f.o.b. destination - correct answer Inventory shipped f.o.b. destination is included in the purchaser's inventory only after it reaches the purchaser's destination. First-in, first-out (FIFO) method - correct answer The first-in, first-out (FIFO) method assumes that items sold are those that were acquired first. Freight-in or Transportation-in - correct answer The cost of freight-in paid by the purchaser generally is part of the cost of inventory. Gross method - correct answer The gross method views discounts not taken as part of inventory cost. Gross profit ratio - correct answer The gross profit ratio indicates the percentage of each sales dollar available to cover expenses other than cost of goods sold and to provide a profit. Last-in, first-out (LIFO) method - correct answer The last-in, first-out (LIFO) method assumes that items sold are those that were most recently acquired. LIFO conformity rule - correct answer If a company uses LIFO to measure its taxable income, IRS regulations require that LIFO also be used to measure income reported to investors and creditors (the LIFO conformity rule).