Which of the following statements is correct regarding the direct method of accounting for any write down of inventories to its net realizable value (NRV)? a. An Allowance to Reduce Inventory to Net Realizable Value account is used to record inventory at the lower of cost and NRV. b. The beginning and ending inventories are measured at the lower of cost and NRV when determining the cost of goods sold for the period. c. The beginning and ending inventories are measured at cost when determining the cost of goods sold for the period. d. The decline in NRV of inventory is reported as an other expense while recovery in NRV of inventory is reported as an other income.

Q: which of the following will not be deducted to compute the consolidated cost of goods sold? A.…

A: Consolidated financial statements means financial statements of overall group where company have one…

Q: Assuming no beginning inventory, what is the trend of inventory prices if cost of goods sold…

A: Definition:   First-in-First-Out (FIFO): In this method, items purchased initially are sold first.…

Q: 1.  The lower-of-cost-or-market method can be applied to each item of inventory. each major class…

A: In case of multiple questions, we are allowed to solve only the first question. In case if you want…

Q: 3.Which of the following pairs of inventory terms would NOT usually go together?   a. Periodic…

A: In the periodic inventory, method inventory is updated at a specific time period, while in the…

Q: Which of the following methods of inventory valuation assumes that the cost of the most recently…

A: Lets understand the basics. There are various methods are followed while valuing inventory which…

Q: If the net realizable of an entity's inventories is less than its cost, the entry to adjust the…

A: Introduction: Under the lower of cost or net realizable value (LCNRV) method, if net selling price…

Q: Prepare a memorandum containing responses to the following items. a.    Describe the cost flow…

A: a.

Q: Which inventory cost flow assumption generally results in the lowest reported amount for cost of…

A: The answer will be FIFO, First-in, first-out i.e. option B.

Q: 1-Which of the following will be classified under inventory? a. Raw Materials b. All the above c.…

A: Gross profit margin = [(REVENUE - COGS) /REVENUE] *100

Q: The Rider Company uses the gross profit method to estimate ending inventory and cost of goods sold.…

A: In order to accurately estimate the ending inventory under the gross profit method, the cost…

Q: 27.IAS 2, Inventories requires that the lower of cost and net realizable value shall be applied   a.…

A: Introduction:- Inventories are valued at cost or net realizable value (Whichever is lower) Cost of…

Q: Identify the inventory costing method (SI, FIFO, LIFO, or WA) best described by each of the…

A: Each inventory valuation methods possesses its own uniqueness that will affect the financial…

Q: What is meant by the term gross margin? Describe costing inventory using first-in, first-out.…

A: What is meant by the term gross margin?

Q: The cost of purchase of inventory does not include: A. Freight handling and other cost directly…

A: Note: Since you have asked multiple questions, we will solve the first question for you. If you want…

Q: Which inventory costing method is almost always done on a perpetual basis?A. specific…

A: There are two type of inventory systems that are being used. One is perpetual inventory system and…

Q: The inventory costing method that matches each unit of inventory with its actual cost is referred to…

A: There are many methods to calculate the inventory like FIFO and LIFO method, average cost method,…

Q: Describe the differences between an inventory system that uses a set quantity (Q)  and one that uses…

A: In a set quantity inventory system the lot size and the order quantity is fixed, while in a fixed…

Q: An overstatement of ending merchandise inventory in the current period results in an understatement…

A: COST OF GOODS SOLDCost of Goods Sold States that the Amount of Cost Included in the Number of Units…

Q: Regardless of the inventory costing system used, cost of goods available for sale must be allocated…

A: Cost of good available comprises of beginning inventory and purchases during the period and are…

Q: Required information [The following information applies to the questions displayed below.] A company…

A: Evaluating Net Realizable Value is essential for proper financial reporting because it prevents…

Q: Calculate (a) ending inventory and (b) Cost of goods sold under the LIFO and AVCO inventory costing…

A: LIFO is the inventory valuation method in which the goods that are bought at the end are sold first…

Q: When a periodic inventory system is used, a.only revenue is recorded each time a sale is made.…

A: Under perpetual inventory, both the sales entry and cost of goods sold entry are recorded each time…

Q: 11. What is the effect on cost of goods sold, gross profit, and net income if ending mer- chandise…

A: Error in inventory recording can be cancelled or we can say nullified within two consecutive…

Q: The inventory evaluation method which does not represent the actual ending inventory value is?…

A: The question is multiple choice question. Required  Choose the Correct Option.

Q: How are errors in inventory between physical counts and the perpetual impact the income statement? O…

A: The practice of physically counting and confirming the precise amount of items or materials on hand…

Q: Under which of the following inventory costing methods is the ending inventory based on the costs of…

A: Inventory valuation refers to the process of assigning a monetary value to the inventory of a…

Q: The process of recording inventory that gives a lower cost of a commodity sold in an income…

A: The inventory can be valued using various methods as LIFO, FIFO and average method.

Q: Which of the following should not be taken into account when determining the cost of inventory? A.…

A: As per IAS 2,  Inventory Cost of Inventory  consists  of  1. Purchase cost 2.conversion cost 3.other…

Q: Weighted Average Cost (Periodic) Units Cost Goods Available for Sale Cost of Goods Sold Ending…

A: Inventory Valuation: It is an asset held for sale in the ordinary course of business. It is used in…

Q: One must consider the percentage completion of the units in beginning inventory under the…

A: Two methods are used for computing the equivalent units of production, one is the weighted average…

Q: Northgate Products Corp. sells gadgets and uses the perpetual inventory system. During the month of…

A: 1a) Stock register January-2019 (Perpetual inventory system - FIFO method) Date Purchased Sold…

Q: To determine the cost of ending inventory using the LIFO​ method:       A. the average cost of the…

A: INVENTORY VALUATION Inventory Valuation is a Method of Calculation of Value of Inventory at the End…

Q: PAS 2 provides clearcut principles concerning measurement of inventory: Paragraph 9 provides that…

A: Inventory Measurement refers to the process of assigning fair value to the inventory held by an…

Q: following is accounted for prospectively? Change in reporting entity. Change in…

A: A change in an estimate is accounted for prospectively.

Q: 1a The inventory cost flow method that reports the earliest costs in ending inventory is a. LIFO b.…

A: When the earliest costs are represented in the ending inventory it means that the inventory with the…

Inventory Valuation

Before discussing the topic inventory valuation let’s discuss the meaning of inventory. In accounting, inventory is also known as stock. Inventory means all the finished goods, materials, merchandise that a business holds for the purpose of selling it in the market with the motive of earning profit.