Intermediate Accounting, 10 Ed
10th Edition
ISBN: 9781260310177
Author: Mark W. Nelson, Wayne B. Thomas J. David Spiceland
Publisher: McGraw-Hill Education
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Textbook Question
Chapter 9, Problem 9.29E
Concepts; terminology
• LO9–1 through LO9–7
Listed below are several terms and phrases associated with inventory measurement. Pair each item from List A with the item from List B (by letter) that is most appropriately associated with it.
| List A | List B |
| __________ 1. Gross profit ratio | a. Reduction in selling price below the original selling price |
| __________ 2. Cost-to-retail percentage | b. Beginning inventory is not included in the calculation of the cost-to-retail percentage |
| __________ 3. Additional markup | c. Deducted in the retail column after the calculation of the cost-to-retail percentage |
| __________ 4. Markdown | d. Requires base year retail to be converted to layer year retail and then to cost |
| __________ 5. Net markup | e. Gross profit divided by net sales |
| __________ 6. Retail method, FIFO and LIFO | f. Material inventory error discovered in a subsequent year |
| __________ 7. Conventional retail method | g. Must be added to sales if sales are recorded net of discounts |
| __________ 8. Change from LIFO | h. Deducted in the retail column to arrive at goods available for sale at retail |
| __________ 9. Dollar-value LIFO retail | i. Divide cost of goods available for sale by goods available at retail |
| __________ 10. Normal spoilage | j. Average cost, lower of cost or market |
| __________ 11. Requires retrospective restatement | k. Added to the retail column to arrive at goods available for sale |
| __________ 12. Employee discounts | l. Increase in selling price subsequent to initial markup |
| __________ 13. Net markdowns | m. Selling price less estimated selling costs |
| __________ 14. Net realizable value | n. Accounting change requiring retrospective treatment |
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QUESTION 11
Match the term on the left to the appropriate description on the right.
v Cost of goods available for sale (COGAS)
A. A valuation rule applied to ending inventory.
v LIFO reserve
B. The maximum value that cost of goods sold (COGS) can be in a period.
C. The amount by which inventory measured under FIFO would exceed inventory
measured under LIFO
v Lower-of-cost-or-market
v Inventory turnover ratio.
D. An inventory cost flow assumption.
E. A measure for evaluating a company's inventory management.
v FIFO (first-in, first out)
v Periodic inventory
F. A system for calculating COGS based on ending inventory value.
Comparing Inventory Methods
Obj. 5 Assume that a firm separately determined inventory under FIFO and LIFO and then compared the results.
In each space that follows, place the correct sign [less than (<), greater than (>), or equal ] for each comparison, assuming periods of rising prices.
1. FIFO inventory
____________
LIFO inventory
2. FIFO cost of goods sold
____________
LIFO cost of goods sold
3. FIFO net income
____________
LIFO net income
4. FIFO income taxes
____________
LIFO income taxes
Why would management prefer to use LIFO over FIFO in periods of rising prices?
7/
Which one of the following methods can be applied in situations where different purchases can be physically separated, and each item sold and remaining in inventory is identified?
a.
All
b.
First In First Out (FIFO)
c.
Specific Identification
d.
Weighted Average
Chapter 9 Solutions
Intermediate Accounting, 10 Ed
Ch. 9 - Explain the (a) lower of cost or net realizable...Ch. 9 - What are the various levels of aggregation to...Ch. 9 - Describe the alternative approaches for recording...Ch. 9 - Explain the gross profit method of estimating...Ch. 9 - The Rider Company uses the gross profit method to...Ch. 9 - Explain the retail inventory method of estimating...Ch. 9 - Both the gross profit method and the retail...Ch. 9 - Define each of the following retail terms: initial...Ch. 9 - Explain how to estimate the average cost of...Ch. 9 - Prob. 9.10Q
Ch. 9 - Explain the LIFO retail inventory method.Ch. 9 - Discuss the treatment of freight-in, net markups,...Ch. 9 - Explain the difference between the retail...Ch. 9 - Prob. 9.14QCh. 9 - Prob. 9.15QCh. 9 - Explain the accounting treatment of material...Ch. 9 - Identify any differences between U.S. GAAP and...Ch. 9 - (Based on Appendix 9) Define purchase commitments....Ch. 9 - (Based on Appendix 9) Explain how purchase...Ch. 9 - Lower of cost or net realizable value LO91 Ross...Ch. 9 - Lower of cost or net realizable value LO91 SLR...Ch. 9 - Lower of cost or market LO91 [This is a variation...Ch. 9 - Lower of cost or market LO91 [This is a variation...Ch. 9 - Prob. 9.5BECh. 9 - Gross profit method; solving for unknown LO92...Ch. 9 - Retail inventory method; average cost LO93 Kiddie...Ch. 9 - Retail inventory method; LIFO LO93 Refer to the...Ch. 9 - Conventional retail method LO94 Refer to the...Ch. 9 - Conventional retail method LO94 Roberson...Ch. 9 - Lower of cost or net realizable value LO91 Herman...Ch. 9 - Lower of cost or net realizable value LO91 The...Ch. 9 - Lower of cost or market LO91 [This is a variation...Ch. 9 - Lower of cost or market LO91 [This is a variation...Ch. 9 - Prob. 9.11ECh. 9 - Concepts; terminology LO91 through LO97 Listed...Ch. 9 - Prob. 9.1PCh. 9 - Prob. 9.3PCh. 9 - Prob. 9.8PCh. 9 - Prob. 9.1DMPCh. 9 - Prob. 9.3DMPCh. 9 - Prob. 9.4DMPCh. 9 - Prob. 9.5DMPCh. 9 - Prob. 9.6DMPCh. 9 - Prob. 9.7DMPCh. 9 - Real World Case 98 Various inventory issues;...Ch. 9 - Prob. 9.9DMPCh. 9 - Judgment Case 910 Inventory errors LO97 Some...Ch. 9 - Prob. 9.12DMPCh. 9 - Prob. 2CCTC
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