48)The situation that requires a departure from the cost basis of accounting to the lower-of- cost-or-net-realizable-value basis in valuing inventory is necessitated by A)a desire for more profit. B)an increase in the value of the inventory. C)a decline in the value of the inventory. D)an increase in selling price.

Q: 1. On which of the following instances is cost estimation not permitted? A. Estimating the cost of…

A: Hi student Since there are multiple questions, we will answer only first question.

Q: Which of the following is not an advantage of a perpetual inventory system? a. Assists in the…

A: The perpetual inventory method is a much better method in comparison to the periodic inventory…

Q: AD, Inc. uses the LIFO-lower of cost or market method to value inventory. If the inventory value is…

A: For financial reporting purposes, will value the inventory in accounting at lower prices or on the…

Q: Which of the following statements about the use of the FIFO assumption is NOT true?   a.   The…

A: Solution: "The FIFO assumption produces inventory asset values that are based on older purchase…

Q: Where there is a reversal of a previous inventory write-down, the entry would involve a _______to…

A: Inventory is the combination of all the goods which are ready for sale, goods which are in process,…

Q: Under the LIFO cost flow assumption during a period ofinflation, which of the following is false? A.…

A: Inflation and cost of goods sold - a company selling goods during periods of inflation will see an…

Q: Current Attempt in Progress If a company overstates its closing inventory, it will O understate…

A: When closing inventory is overstated, this reduces the amount of inventory that would otherwise have…

Q: A company records inventory at gross invoice price. Theoretically, how should the following affect…

A: Solution: Interest on inventory loan do not affect cost of inventory, it is working capital loan…

Q: Which one of the following sets of inventory cost flow assumptions is not susceptible to profit…

A: FIFO and average cost methods are considered as the sets of inventory cost flow assumptions that are…

Q: Which of the following is false regarding the LIFO method of inventory valuation? a. The material…

A: Last-In-First-Out method(LIFO) is one of the method of inventory valuation where units sold are…

Q: Why does Target feel that the retail inventory method will result in inventory beingvalued at the…

A: LCM (Lower of Cost or Market) approach:   It is an approach that values the inventory at historical…

Q: Which of the following is not a disadvantage of the LIFO inventory cost flow assumption? a. The…

A: LIFO is the Last in first out method of inventory which says that inventory purchased last should be…

Q: The net realizable value of Lake Corporation’s inventory has declined below its cost. Allyn Conan,…

A: a. The ethical issue involved in the situation is, use of cost-of-goods-sold method to write down…

Q: Which of the following statements is incorrect? Group of answer choices A)Ending inventory exceeds…

A: a) Cost of goods sold= Opening inventory + Purchases - Ending inventory Lets take a example…

Q: Which of the following is not an advantage of a perpetual inventory system? a. assits in the…

A: Under the perpetual inventory system, transaction related to the inventory is updated immediately as…

Q: If costs are declining, will the LIFO or FIFO method of inventory valuation yield the lower cost of…

A: Inventory cost flow assumptions: These are the methods used by the companies to compute the cost…

Q: Which of the following statements is incorrect?

A: Cost of Goods Sold: Cost of Goods sold is the Cost of the items that are sold it is calculated for…

Q: Which of the following statements is correct regarding the direct method of accounting for any write…

A: Direct Write Down Method: When a firm uses the direct write-off technique, a credit will be recorded…

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 major criticism of the lower of cost or market rule for valuation of inventory is that

A:

Q: Do you agree with the following statements? Express your opinion on each statement.

A: 1: This statement is correct  This can be explained with the help of example: Suppose closing stock…

Q: What is the effect on net income if a company fails to record a purchase in transit (FOB shipping…

A: Accounting for inventory Inventory is all type of goods and products held by the seller to sell in…

Q: Which statements below are true? 1. LCM and LCNRV may be applied by individual products, by…

A:

Q: An overstatement of ending inventory results in: Select one: a. an understatement of COGS and an…

A: option a is the correct answer.

Q: Under IFRS, which of the following methods is not acceptable for the valuation of inventory? a.…

A:

Q: Which of the following is not a reason for the physical inventory count to differ from what…

A: Inventory is one of the important current asset of the business. This can be in form of raw…

Q: The application of the lower of cost or market rule to inventory valuation is an example of a. the…

A: The valuation of inventory is done at lower of cost or net realisable value as per relevant…

Q: An increase in the inventory turnover rate is indicative of: Multiple Choice a decrease in the cost…

A: Inventory turnover rate is calculated as ratio of cost of goods sold and inventory

Q: Rustic Company has recognized an impairment loss on the value of inventory. If the inventory's value…

A: there is difference in the requirement of and recording of inventory as per ifrs and US GAAP . gaap…

Q: If beginning inventory is understated, cost of goods sold would also be understated. True False

A: The cost of goods sold can be calculated by adding up net purchase and deducting ending inventory…

Q: Why does reporting income under generally accepted accounting principles “reward building inventory…

A: Generally Accepted Accounting Principles: The Generally Accepted Accounting Principles are a group…

Q: When a company determines that the net realizable value of its ending inventory is lower than its…

A: Lower of cost and net realizable value: The lower of cost and net realizable value is a method which…

Q: Allowance Method in accounting for inventory write-down

A: Statement I is correct because Allowance method is required to be followed in accounting for…

Q: 1. What is the effect on net income if a company fails to record a purchase in transit (FOB shipping…

A: Net income refers to the income which is calculated by deducting cost of goods sold, expenses,…

Q: If a misstatement of inventory occurs, the net income for-----periods will be misstated

A: The ending inventory affects the income statement and after that ending inventory becomes the…

Q: You have been asked by the financial vice president to develop a short presentation on the LCNRV…

A: a. As per GAAP, the inventory is to be valued at the lower of its cost i.e. the laid down cost or…

Q: 8. According to IAS 2, inventory must be reflected at the lower of cost and net realisable value.…

A: NET REALISABLE VALUE IS THE ESTIMATED SELLING PRICE LESS THE ESTIMATED COST OF COMPLETION AND THE…

Q: a. Income manipulation is difficult under LIFO. b. Accounting principles do not require that the…

A: The right answer is option b. Accounting principles do not require that the inventory cost flow…

Q: Which of the following statements about the use of the FIFO assumption is NOT true? a.The FIFO…

A: In FIFO method  the opening  and earliest goods will be sold first.

Inventory Accounting

Inventory accounting is that branch of accounting that helps in determining the specific value of assets at different stages of production and development.