Acct Ch13

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CHAPTER 9
INVENTORIES: ADDITIONAL VALUATION
ISSUES

MULTIPLE CHOICE—Conceptual
Answer
d
d
c
b
a
c
d
b
d
a
d
a
a
d
b
d
c
a
d
b
a
b
c
c

No.

Description

1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
*22.
23.
*24.

Knowledge of lower of cost or market valuations.
Appropriate use of LCM valuation.
Definition of "market" under LCM.
Definition of "ceiling."
Definition of "designated market value."
Application of lower of cost or market valuation.
Effect of inventory write-down.
Net realizable value under LCM.
Definition of "net realizable value."
Valuation of inventory at net realizable value.
Appropriate use of net realizable value.
Material purchase commitments.
Loss recognition on purchase commitments.
Appropriate use of the gross profit method.
Appropriate use of the gross profit method.
Advantage of retail inventory method.
Conventional retail inventory method.
Assumptions of the retail inventory method.
Appropriate use of the retail inventory method.
Markdowns and the conventional retail method.
Markups and the conventional retail method.
Knowledge of the cost ratio for retail inventory methods.
Inventory turnover ratio.
Dollar-value LIFO retail method.

MULTIPLE CHOICE—Computational
Answer
a
c
c
d
d
a
a
b
c

No.

Description

25.
26.
27.
28.
29.
30.
31.
32.
33.

Value inventory at LCM.
Relative sales method of inventory valuation.
Entry for purchase commitment loss.
Calculate cost of goods sold given a markup on cost.
Calculate merchandise purchases given a markup on cost.
Calculate total sales from cost information.
Markup on cost equivalent to a markup on selling price.
Estimate ending inventory using gross profit method.
Calculate ending inventory using gross profit method

*This topic is dealt with in an Appendix to the chapter.

MULTIPLE CHOICE—Computational

(cont.)

Answer

No.

Description

.

34.

Calculate ending inventory using gross profit method.

b

a
a
b
b
a
b
b
c
b
d
c
d
a
a
b
a

35.
36.
37.
38.
39.
40.
*41.
*42.
43.
44.
*45.
46.
47.
*48.
*49.
*50.

Estimate cost of inventory destroyed by fire.
Determine items to be included in inventory.
Calculate cost of retail ratio to approximate LCM.
Calculate ending inventory at retail.
Calculate cost to retail ratio approximating LCM.
Calculate cost of inventory lost using retail method.
Calculate ending inventory at cost using LIFO retail.
Determine cost to retail ratio using LIFO retail.
Calculate inventory turnover ratio.
Determine cost to retail ratio to approximate LCM.
Determine cost to retail ratio using LIFO cost.
Calculate ending inventory at retail.
Calculate ending inventory using conventional retail.
Calculate ending inventory cost using dollar-value LIFO.
Calculate cost of ending inventory using LIFO retail.
Calculate ending inventory cost using dollar-value LIFO.

MULTIPLE CHOICE—CPA Adapted
Answer
d
b
b
a
a
d
a

No.
51.
52.
53.
54.
55.
56.
*57.

Description
Recognizing a loss due to LCM.
Appropriate use of replacement costs in LCM.
Identification of the designated market value.
Estimate cost of inventory lost by theft.
Determine cost of ending inventory using retail method.
Determine cost of ending inventory using retail method.
Calculate ending inventory using LIFO retail.

EXERCISES
Item

Description

E9-58
E9-59
E9-60
E9-61
E9-62
E9-63
E9-64
E9-65
E9-66
E9-67

Lower of cost or market.
Lower of cost or market.
Lower of cost or market.
Lower of cost or market.
Lower of cost or market.
Relative sales value method.
Gross profit method.
Gross profit method.
Gross profit method.
Comparison of inventory methods.

PROBLEMS
Item

Description

P9-68
P9-69
*P9-70
*P9-71
*P9-72
*P9-73
*P9-74

Gross profit method.
Retail inventory method.
Retail inventory method.
LIFO...
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