In determining the market value of ending inventory, which of thefollowing is NOT considered as a possible market value?a) Replacement cost of the inventory.b) Ceiling price, calculated as the Selling price less costs to complete orselling costs.c) Net realizable valued) Floor price, calculated as the Ceiling price less the profit margin.Selling price without any adjustments.

The correct answer is:d) Selling price without any adjustments. Explanation:In determining the…

Answered: In determining the market value of…

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

Chapter9: Working Capital

Section: Chapter Questions

Problem 7Q

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Considering the following information, and applying the lower-of-cost-or-market approach, what is the correct value that should be reported on the balance sheet for the inventory?
When would using the FIFO inventory costing method produce higher inventory account balances than the LIFO method would? A. inflationary times B. deflationary times C. always D. never
The original cost of an item of inventory is above its replacement cost. The item s replacement cost is below its net realizable value but is higher than its net realizable value minus a normal profit. Under the lower of cost or market method, the inventory item should be valued at: a. Net realizable value. b. Original cost. c. Replacement cost. d. Net realizable value less normal profit margin.
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Under the lower of cost or market inventory valuation rule, market value of inventory is defined as: a.Net realizable value. b.Net realizable value minus a normal profit margin. c.The lower of net realizable value or current replacement cost. d.Current replacement cost.
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In determining inventory's lower of cost or net realizable value, NRV is defined as: O Selling Cost O replacement cost Osales price less selling costs Sales Price
Which of the following regarding the lower of cost ormarket rule for inventory are true?(i) The lower of cost or market rule is an example of thehistorical cost principle.(ii) When the market value of inventory drops belowthe original cost of inventory shown in the financialrecords, net income is reduced.(iii) When the market value of inventory drops belowthe original cost of inventory shown in the financialrecords, total assets are reduced.a. (i) only c. (ii) and (iii)b. (ii) only d. All of the above
Which of the following statements about the use of the FIFO assumption is NOT true? a. The FIFO assumption assigns the more recent purchase costs to the balance sheet inventory asset account. b. The FIFO assumption is not affected by the inventory control method. c. In periods of rising prices it produces a higher profit than LIFO. d. The FIFO assumption produces inventory asset values that are based on older purchase costs.
Which of the following statements about the use of the FIFO assumption is NOT true? a.The FIFO assumption assigns the more recent purchase costs to the balance sheet inventory asset account. b.The FIFO assumption is not affected by the inventory control method. c.In periods of rising prices it produces a higher profit than LIFO. d.The FIFO assumption produces inventory asset values that are based on older purchase costs.
Which of the following is false regarding the LIFO method of inventory valuation? a. The material issue will be priced at the price of the material that is purchased last. b. Value of closing stock will be the earliest costs c. All the given option d. Value of closing stock will be at recent costs.

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