Intermediate Accounting Ch. 9 15th
Edition Exam with 100% Solved
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: -
✔✔ allowance method.
The primary basis of accounting for inventories is cost. A departure from
the cost basis of pricing the inventory is required where there is evidence
that when the goods are sold in the ordinary course of business their -✔✔
future utility will be less than their cost.
In applying Lower-of-Cost-or-Market, the designated market value is -✔✔
the middle value of replacement cost, net realizable value and net
realizable value less a normal profit margin.
Net realizable value is defined as estimated selling price less purchase
price. -✔✔ False
The direct method of recording inventory at market under the lower of cost
or market rule establishes a separate contra asset account and a loss
account to record the write-off. -✔✔ False
, In applying the lower of cost or market rule, the floor is defined as: -✔✔ net
realizable value less a normal profit margin.
In the lower of cost or market rule, net realizable value is referred to as the:
-✔✔ ceiling
When the direct method is used adjust cost to "market", what account is
debited? -✔✔ Cost of Goods Sold.
Inventory may be recorded at net realizable value if -✔✔ there are no
significant costs of disposal, the inventory consists of precious metals or
agricultural products, and there is a controlled market with a quoted price.
The LIFO retail method assumes that markups and markdowns apply to
both beginning inventory and goods purchased during the period. -✔✔
False
The relative sales value method is used throughout the: -✔✔ petroleum
industry.
If a material amount of inventory has been ordered through a formal
purchase contract at the balance sheet date for future delivery at firm
prices, -✔✔ this fact must be disclosed.
The percentage markup on cost can be computed by dividing gross profit
by 100%: -✔✔ minus gross profit.
Edition Exam with 100% Solved
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: -
✔✔ allowance method.
The primary basis of accounting for inventories is cost. A departure from
the cost basis of pricing the inventory is required where there is evidence
that when the goods are sold in the ordinary course of business their -✔✔
future utility will be less than their cost.
In applying Lower-of-Cost-or-Market, the designated market value is -✔✔
the middle value of replacement cost, net realizable value and net
realizable value less a normal profit margin.
Net realizable value is defined as estimated selling price less purchase
price. -✔✔ False
The direct method of recording inventory at market under the lower of cost
or market rule establishes a separate contra asset account and a loss
account to record the write-off. -✔✔ False
, In applying the lower of cost or market rule, the floor is defined as: -✔✔ net
realizable value less a normal profit margin.
In the lower of cost or market rule, net realizable value is referred to as the:
-✔✔ ceiling
When the direct method is used adjust cost to "market", what account is
debited? -✔✔ Cost of Goods Sold.
Inventory may be recorded at net realizable value if -✔✔ there are no
significant costs of disposal, the inventory consists of precious metals or
agricultural products, and there is a controlled market with a quoted price.
The LIFO retail method assumes that markups and markdowns apply to
both beginning inventory and goods purchased during the period. -✔✔
False
The relative sales value method is used throughout the: -✔✔ petroleum
industry.
If a material amount of inventory has been ordered through a formal
purchase contract at the balance sheet date for future delivery at firm
prices, -✔✔ this fact must be disclosed.
The percentage markup on cost can be computed by dividing gross profit
by 100%: -✔✔ minus gross profit.
