ACG 4101 Final Exam
Inventory must be reported at - answer the lower of cost and net realizable value
(according to GAAP)
What does the utility of a company result from ? - answer from the ultimate sale of that
inventory
What impairs utility - answer deterioration, obsolescence, changes in price levels, or
any situation that might compromise the inventory's salability impairs that utility.
Why do we use lower of cost and net realizable method - answer It avoids reporting
inventory at an amount greater than the benefits it can provide. Reporting inventories
this way causes losses to be recognized in the period the value of inventory declines
below its cost rather than in the period in which the goods ultimately are sold.
how to get NRV - answerSelling price - estimated costs to sell
If inventory write-downs are commonplace for a company, - answer losses usually are
included in cost of goods sold
inventory estimation techniques - answergross profit method and retail inventory
method
Inventory must be reported at - answer the lower of cost and net realizable value
(according to GAAP)
What does the utility of a company result from ? - answer from the ultimate sale of that
inventory
What impairs utility - answer deterioration, obsolescence, changes in price levels, or
any situation that might compromise the inventory's salability impairs that utility.
Why do we use lower of cost and net realizable method - answer It avoids reporting
inventory at an amount greater than the benefits it can provide. Reporting inventories
this way causes losses to be recognized in the period the value of inventory declines
below its cost rather than in the period in which the goods ultimately are sold.
how to get NRV - answerSelling price - estimated costs to sell
If inventory write-downs are commonplace for a company, - answer losses usually are
included in cost of goods sold
inventory estimation techniques - answergross profit method and retail inventory
method
