GENERAL ACCOUNT - 65 WHEN THE MARKET VALUE OF INVENTORY ITEMS HAS DECLINED BELOW ITS COST, WHICH METHOD WOULD BE THE MOST APPROPRIATE IN COMPLYING WITH GAAP? A. GROSS PROFIT B. LIFO C. LOWER OF COST OR MARKET D. RETAIL

GENERAL ACCOUNT - 65 WHEN THE MARKET VALUE OF INVENTORY ITEMS HAS DECLINED BELOW ITS COST, WHICH METHOD WOULD BE THE MOST APPROPRIATE IN COMPLYING WITH GAAP? A. GROSS PROFIT B. LIFO C. LOWER OF COST OR MARKET D. RETAIL

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter8: Inventories: Special Valuation Issues

Section: Chapter Questions

Problem 13E: Retail Inventory Method The following information relates to the retail inventory method used by...

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Question

GENERAL ACCOUNT - 65
WHEN THE MARKET VALUE OF INVENTORY ITEMS HAS
DECLINED BELOW ITS COST, WHICH METHOD WOULD BE
THE MOST APPROPRIATE IN COMPLYING WITH GAAP?
A. GROSS PROFIT
B. LIFO
C. LOWER OF COST OR MARKET
D. RETAIL

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Inventory Valuation Specific identification method Weighted average cost method FIFO method LIFO method LIFO liquidation LIFO conformity rule LIFO reserve Replacement cost Inventory profit Lower-of-cost-or-market (LCM) rule Inventory turnover ratio Number of days sales in inventory Moving average (Appendix) The name given to an average cost method when a weighted average cost assumption is used with a perpetual inventory system. An inventory costing method that assigns the same unit cost to all units available for sale during the period. A conservative inventory valuation approach that is an attempt to anticipate declines in the value of inventory before its actual sale. An inventory costing method that assigns the most recent costs to ending inventory. The current cost of a unit of inventory. An inventory costing method that assigns the most recent costs to cost of goods sold. A measure of how long it takes to sell inventory. The IRS requirement that when LIFO is used on a tax return, it must also be used in reporting income to stockholders. An inventory costing method that relies on matching unit costs with the actual units sold. The portion of the gross profit that results from holding inventory during a period of rising prices. The result of selling more units than are purchased during the period, which can have negative tax consequences if a company is using LIFO. The excess of the value of a companys inventory stated at FIFO over the value stated at LIFO. A measure of the number of times inventory is sold during the period.
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