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a. Permits entities to avoid taking an annual physical d. Provides a method for inventory control and facilitates inventory. c. Hides costs from customers and employees. d. Provides a method for inventory control and facilitate determination of the periodic inventory.

a. Permits entities to avoid taking an annual physical d. Provides a method for inventory control and facilitates inventory. c. Hides costs from customers and employees. d. Provides a method for inventory control and facilitate determination of the periodic inventory.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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following in the calculation of the goods available for sale 2. To produce an inventory valuation which approximates d. Provides a method for inventory control and facilitates a. Permits entities to avoid taking an annual physical 1. An advantage of the retail inventory method is thet inventory. b. Yields a more accurate measurement of inventom. Hides costs from customers and employees. с. a determination of the periodic inventory. 2. To produce an inventory valuation which approximates the lower of cost and NRV using the retail method, the computation of the ratio of cost to retail should a. Include markup but not markdown b. Include markup and markdown c. Ignore both markup and markdown d. Include markdown but not markup 3. When the conventional retail inventory method is used, markdowns are commonly ignored in the computation of cost to retail ratio because a. There may be no markdowns during the year. b. This tends to give a better approximation of the lower of average cost and net realizable value. c. Markups are also ignored. d. This tends to result in the showing of a normal protit margin in a period when no markdown goods have been sold. 4. The retail inventory method would include which of u following in the calculation of the goods available for sae at both cost and retail? a. Freight in b. Purchase return c. Markup d. Markdown
Transcribed Image Text:following in the calculation of the goods available for sale 2. To produce an inventory valuation which approximates d. Provides a method for inventory control and facilitates a. Permits entities to avoid taking an annual physical 1. An advantage of the retail inventory method is thet inventory. b. Yields a more accurate measurement of inventom. Hides costs from customers and employees. с. a determination of the periodic inventory. 2. To produce an inventory valuation which approximates the lower of cost and NRV using the retail method, the computation of the ratio of cost to retail should a. Include markup but not markdown b. Include markup and markdown c. Ignore both markup and markdown d. Include markdown but not markup 3. When the conventional retail inventory method is used, markdowns are commonly ignored in the computation of cost to retail ratio because a. There may be no markdowns during the year. b. This tends to give a better approximation of the lower of average cost and net realizable value. c. Markups are also ignored. d. This tends to result in the showing of a normal protit margin in a period when no markdown goods have been sold. 4. The retail inventory method would include which of u following in the calculation of the goods available for sae at both cost and retail? a. Freight in b. Purchase return c. Markup d. Markdown
valuation at the lower of average cost and net realizable Generally, accountants ignore net markups and net include net markdowns in computing cost ratio. 9. An inventory method designed to approximate inventory b. Generally, accountants exclude net markups and The retail method results in a lower ending inventory if With regard to the retail inventory method, which is the 5. cost accurate statement? markdowns in computing the cost ratio. a. a C. net markups are included but net markdowns are excluded in computing the cost ratio. A It is not adaptable to FIFO costing. - The conventional retail method produces an ending inventory that approximates . Lower of average cost and net realizable value h Lower of FIFO cost and net realizable value . Lower of LIFO cost and net realizable value d. Lower of cost and net realizable value 1. If the conservative retail inventory method is used, which of the following calculations would include or exclude net markdowns? Cost ratio Ending inventory at retail Include b. a. Include Exclude Exclude Include Еxclude Include с. d. Еxclude 8. Which of the following is not a reason why the retail inventory method is used widely? a. As a control measure in determining inventory shortage b. For insurance information * To permit the computation of net income without a physical count of inventory 4. To defer income tax liability value is a. Average retail method b. FIFO retail c. Conservative retail method d. LIFO retail 10. The retail method is based on the assumption that a. Final inventory and the total goods available for sale contain the same proportion of high cost and low cost ratio of goods. b. Gross margin is the same each perio c. Ratio of cost to retail changes at a constant rate. d. Proportions of markup and markdown are the same.
Transcribed Image Text:valuation at the lower of average cost and net realizable Generally, accountants ignore net markups and net include net markdowns in computing cost ratio. 9. An inventory method designed to approximate inventory b. Generally, accountants exclude net markups and The retail method results in a lower ending inventory if With regard to the retail inventory method, which is the 5. cost accurate statement? markdowns in computing the cost ratio. a. a C. net markups are included but net markdowns are excluded in computing the cost ratio. A It is not adaptable to FIFO costing. - The conventional retail method produces an ending inventory that approximates . Lower of average cost and net realizable value h Lower of FIFO cost and net realizable value . Lower of LIFO cost and net realizable value d. Lower of cost and net realizable value 1. If the conservative retail inventory method is used, which of the following calculations would include or exclude net markdowns? Cost ratio Ending inventory at retail Include b. a. Include Exclude Exclude Include Еxclude Include с. d. Еxclude 8. Which of the following is not a reason why the retail inventory method is used widely? a. As a control measure in determining inventory shortage b. For insurance information * To permit the computation of net income without a physical count of inventory 4. To defer income tax liability value is a. Average retail method b. FIFO retail c. Conservative retail method d. LIFO retail 10. The retail method is based on the assumption that a. Final inventory and the total goods available for sale contain the same proportion of high cost and low cost ratio of goods. b. Gross margin is the same each perio c. Ratio of cost to retail changes at a constant rate. d. Proportions of markup and markdown are the same.
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When computing ending inventory, what is the difference between a LIFO computation and a FIFO computation?

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