The reduced of cost or net realizable approach is_____ for service providers that use_____.

You are watching: The gross profit method of estimating ending inventory is not acceptable for:

1) Optional under GAAP; any type of approach of inventory valuation

2) forced under GAAP; any technique of inventory valuation

3) Optional under GAAP; a technique various other than LIFO or retail inventory

4) compelled under GAAP; a technique various other than LIFO or retail inventory


Net Realizable value of inventory is established by subtracting selling price from the...

1) normal profit

2) meant offering price

3) replacement cost


For financial reporting, the reduced of cost or net realizable worth method have the right to be applied to...(choose all that apply)

1) teams of inventory

2) the entire inventory

3) individual inventory items

4) just to inventory purchased during the current year


Smith Company"s inventory price is $100. The intended sales price is $110, estimated selling expenses are $6. Consistent through the lower of price and net realizable worth strategy, this inventory item need to be valued at...

1) $104

2) $96

3) $110

4) $100


Ziegler Company kind of appropriately uses the reduced of cost and net realizable value dominance and also determines that its inventory worth has decreased below price. Which of the adhering to methods may Ziegler use to readjust its inventory to sector value? (choose all that apply)

1) identify the write-down as an addition to price of products sold

2) Recognize the write-dvery own as a separate line item

3) Defer the write-dvery own till the inventory is sold.


1) acknowledge the write-down as an enhancement to price of goods sold

2) Recognize the write-down as a separate line item


Western Company type of determines the cost of its inventory is $410,000 and also net realizable worth is $400,000. Western Company need to, (pick all that apply)...

1) debit COGS $10,000

2) delittle inventory $10,000

3) crmodify inventory $10,000

4) credit COGS $10,000

5) not document a journal entry


Which of the adhering to statements regarding inventory valuation is correct?

1) Both UNITED STATE GAAP and IFRS require that inventory is worths at the lower of price or net realizable worth.

2) Only IFRS requires that inventory is valued at the reduced of cost or net realizable value.

3) Only UNITED STATE GAAP needs that inventory is valued at the lower of expense or net realizable value.


1) Both U.S. GAAP and also IFRS need that inventory is worths at the lower of price or net realizable value.


Western Company type of freshly lost its entire inventory in an earthquake. The following indevelopment is obtainable from its audit records: Beginning Inventory: $5,000; Purchases: $18,000; Net Sales: $40,000;

The company"s average gross profit portion is 40%. Using the gross profit strategy, a reasonable estimate of COGS for the previous period would be...

1) $ 23,000

2) $ 24,000

3) $ 16,000

4) $ 18,000


The finishing inventory balance identified using the gross profit approach is _____ and also _____ acceptable according to GAAP...

1) an estimate; is not

2) an estimate; is

3) an accurate amount; is

4) an accurate amount; is not


The expense to retail percent is uncovered by splitting products accessible for sale at _____ by items accessible for sale at _____...

1) cost; sector value

2) cost; current offering price

3) current selling price; Cost

4) retail; cost


The _____ technique assumes that expense of products offered and finishing inventory each consist of a mixture of all items available for sale.

1) LIFO

2) average cost

3) FIFO

4) reduced of cost and net realizable value


Warren Company"s documents reveal the complying with indevelopment regarding its inventory: Beginning Inventory was: $100,000 at price and also $160,000 at retail. Purchases throughout the year were $300,000 at cost and $500,000 at retail. Net markups were $10,000 and net mark-downs, $20,000.

Assuming the retail inventory approach is supplied to approximate average expense, what is the amount of products obtainable for sale at retail?

1) $400,000

2) $670,000

3) $660,000

4) $650,000


Applying the retail inventory method to approximate the reduced of average expense or market value is often referred to as the...

1) average retail method

2) net realizable retail method

3) conventional retail method

4) conventional retail method


Tore Company"s documents expose the adhering to indevelopment about its inventory: Beginning Inventory was $100,000 at expense and also $160,000 at retail. Purchases in the time of the year were $300,000 at price and also $500,000 at retail. Net markups were $10,000 and also net markdowns, $20,000. Assuming the conventional retail technique, the cost-to-retail proportion will be...

1) 59.7%

2) 60.61%

3) 61.53%


When tright here is a net rise in the physical amount of inventory during a period, the usage of _____ results in an additional layer of inventory...

1) average cost

2) FIFO

3) LIFO


Using LIFO retail method, we determine if a brand-new layer at retail has actually been included by comparing beginning inventory at retail to what?

1) Net sales at retail

2) Ending inventory at retail

3) Goods obtainable for sale at retail


Thompboy Company uses the LIFO retail inventory technique. Its cost-to-retail percent is 50% based upon beginning inventory and 55% based on current-period purchases. The company established that during the current duration a new layer was included via a retail worth of $100,000. The brand-new layer at price should be...

1) $55,000

2) $45,000

3) $52,500

4) $50,000


Geese Company type of makes use of the dollar-worth LIFO retail inventory technique. Its cost-to-retail percentage is 60% based on beginning inventory and also 64% based upon current-duration purchases. The agency identified that start inventory at retail was $200,000 and that finishing inventory at current-year retail prices was $250,000. The current-year price index is 1.10. Round interim calculations to the nearemainder entirety dollar amount. Estimated finishing inventory at cost would be...

1) $250,000

2) $139,200

3) $150,000

4) $239,000


2) $139,200


The dollar-worth LIFO retail strategy...(choose all that apply)

1) removed the result of any type of price transforms when comparing beginning and finishing inventory

2) eliminates the impact of any type of amount alters once comparing start and finishing inventory

3) enables the firm to recognize if tright here is a boost in the amount of inventory

4) enables the agency to recognize if tright here is a rise in price of inventory


1) eliminated the effect of any kind of price transforms once comparing start and ending inventory

3) allows the agency to identify if tbelow is a boost in the amount of inventory


Under the dollar-worth LIFO retail technique, each inventory layer carries it"s distinctive...

1) retail price index only

2) cost-to-retail percent only

3) retail price index and cost-to-retail percentage


3) retail price index and also cost-to-retail percentage


True or False: Most changes in inventory method are accounted for prospectively


False


On March 31,Osautomobile Corp. Changes from LIFO to FIFO method. Its financial statement notes indicate that beginning inventory would certainly have actually been $50,000 greater if it had actually made use of FIFO during prior years. Oscar"s journal entry should encompass a...

1) delittle to COGS

2) Credit to COGS

3) Crmodify to retained earnings

4) Delittle to retained earnings


3) Crmodify to maintained earnings


When a company alters to the LIFO inventory method,

1) they should report the cumulative effect on preserved earnings

2) they should restate prior years financial statements

3) they carry out not restate prior year financial statements


3) they execute not restate prior year financial statements


Accounting errors...

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1) must be corrected by the finish of the year they are found in.

2) carry out not have to be corrected

3) have to be corrected as soon as they are discovered


3) need to be corrected as soon as they are discovered


accountancy errors that are discovered during the exact same audit period that they are emerged have to be corrected by (choose all that apply)

1) reversing the incorrect entry

2) adjusting the preserved revenue balance

3) recording the correct entry


1) reversing the incorrect entry

3) recording the correct entry


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