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Intermediate Accounting Ch. 9 15th Edition Exam with 100% Solved $9.99   Add to cart

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Intermediate Accounting Ch. 9 15th Edition Exam with 100% Solved

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  • Intermediate Accounting

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 d...

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  • September 3, 2024
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  • 2024/2025
  • Exam (elaborations)
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  • Intermediate Accounting
  • Intermediate Accounting
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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.

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