FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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- Which U.S. GAAP principle or rule would apply if the net realizable value of acompany’s inventory is below its original cost?a. Lower-of-cost-or-market ruleb. Consistency principlec. Disclosure principled. Historical cost principlearrow_forward4. The purchase of inventory items on account using the perpetual inventory method a. Has no effect on the current ratio but decreases working capital. b. Has no effect on working capital but decreases the current ratio. c. Decreases working capital and the current ratio. d. Has no effect on working capital nor the current ratio. 5. The cost of inventories shall be measured using a. Either FIFO, average method or LIFO b. Average method c. Either FIFO or average method d. FIFOarrow_forwardThe following information for Tuell Company is available: 1. Assume Tuell uses the LIFO cost flow assumption. what is the correct inventory value in each of the preceding situations under U.S. GAAP? 2. Assume Tuell Uses the average cost inventorγcost flow asstrmption. what is the correct inventory value in each of the preceding situations under U .S. GAAP? 3. Assume that Tuell uses the average cost inventory cost flow assumption. What is the correct inventor)' value rn each of the preceding situations if Tuell uses IFRS?arrow_forward
- 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.arrow_forwardIf the profit margin is 0.1142, asset turnover is 0.5619 and financial leverage is 1.2937, what is the return on asset? Multiple Choice 0.1142 0.7269 0.0830 0.0642arrow_forwardH7. For the same transactions, why does the weighted-average cost method provide different value for ending inventory and COGS depending on whether the periodic or perpetual inventory system is used? Select one: a. Perpetual inventory calculates and assigns costs as items are sold, while periodic inventory calculates and assigns costs at the end of the period. b. Perpetual inventory calculates and assigns costs at the end of the period, while periodic inventory calculates and assigns costs as items are sold. c. Perpetual inventory counts all the purchases for the month first before calculating the average cost, while periodic calculates the average cost after every transaction. d. Perpetual inventory and periodic inventory will not provide different values using Explain also wrong options and explain with detailsarrow_forward
- Lower-of-Cost-or-Market Method On the basis of the data shown below: Inventory Cost per Market Value per Unit Item Quantity Unit (Net Realizable Value) MX62 56 $56 $58 VZ31 107 29 26 Determine the value of the inventory at the lower of cost or market. Apply lower of cost or market to each inventory item, as shown in Exhibit 9.arrow_forwardAa 129.arrow_forward18.Net realizable value is a. acquisition cost plus estimated costs to complete and sell b. estimated selling price less estimated cost to complete and sell c. estimated selling price less estimated costs to complete and sell and normal profit. d. estimated selling price.arrow_forward
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