ACCT325 Chapter 9 review_review session

Front

For companies that use a cost method other than LIFO or the retail inventory method, we report inventory at the lower of cost or market.

Back

False

Front

NRV is the estimated using selling price of the inventory minus estimated selling costs. True or False?

Back

True

Front

The lower of cost or net realizable value (LCNRV) method for inventory helps to avoid reporting inventory at an amount that exceeds the cash it can provide to the company.

Back

True

Front

LCNRV can be applied (a) to individual inventory items, (b) to major categories of inventory, or (c) to the entire inventory.

Back

True

Front

Inventory write-downs usually are included in cost of goods sold.

Back

True

Front

After inventory write-down is recorded, if the inventory value later increases prior to its sale, we should write it back up.

Back

False

Front

Companies that use LIFO or the retail inventory method report inventory using the lower of cost or market (LCM) approach.

Back

True

Front

When applying LCM, if replacement cost is between the ceiling and the floor, it represents market; if replacement cost is above the ceiling or below the floor, the ceiling or the floor becomes market.

Back

True

Front

The LCNRV and LCM reflect the accounting principle: conservatism.

Back

True

Front

The gross profit method is useful in determining cost of inventory that has been lost, destroyed, or stolen.

Back

True