Problem 2: Multiple choice- Theory 1. Which of the following statements is correct? a.PAS 2 Inventories does not allow the use of inventory estimates. b. If the cost ratio is 80%, the gross profit rate based on cost is 20%. c. If the gross profit based on cost is 25%, the cost ratio is 75%. d. PAS 2 allows the use of estimates if the estimate reasonably approximates the cost.

Q: Compute the ending inventory and the cost of goods sold under the LIFO cost flow assumption assuming…

A: LIFO is last in first out method in which inventories which are purchased in last will be sold out…

Q: The following information is for Lawrence Company, who uses the LIFO method: Item Cost NRV Minus…

A: ASU 2015-11 (topic 330) was issued by FASB to simplify the current application of ASC 330 (US GAAP)…

Q: Using the lower of cost or market, what should the total inventory value be for the following items:…

A: Item A cost=Quantity×Cost per unit=186×$6=$1,116

Q: The following information is for Lawrence Company, who uses the LIFO method: ​ ​ NRV Minus Net…

A: S.no               Cost     Market value  (cost or market value ) which is lower  a $3.40…

Q: If the cost of an item of inventory is $52.00 and the current replacement cost is $70.00, what is…

A: As per lower of cost or market price method, we need to record the inventory at the lowest value of…

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: 22.Which inventory costing method has a stabilizing effect on profit, such that during a period of…

A: There are four Methods of issue of material  1.First-in, first-out method 2.  Last-in, first-out…

Q: Can you explain why the answer is B and not C. If inventory prices are decreasing wouldnt LIFO…

A: Yes, you are right in the falling inventory prices, the LIFO method would result in the selling of…

Q: question 7 In a period of rising prices, the inventory method which tends to give the highest…

A: Inventory valuation is based on the flow of exemption used by the company. There are many methods…

Q: S6-2 Determining inventory costing methods Ward Hardware does not expect costs to change…

A: Perpetual Inventory System: Perpetual Inventory System refers to the continuous accounting system…

Q: Lower-of-Cost-or-Market Method OBJ. 6 EE 7-6 On the basis of the following data, determine the…

A: Lower-of-Cost-or Market is method for Inventory Valuation where Inventory is valued at lesser value.…

Q: True False 1. During a period of rising costs, the LIFO cost flow assumption results in lower cost…

A: LIFO means last in first out where as FIFO means first in first out. Inventory and cost of goods…

Q: Required: 1. What is the estimated fire loss if OOO Company applies the conservative retail…

A: Retail inventory method  refers to the method used by retailers who resell products in order to…

Q: In some instances, accounting principles require a departure from valuing inventories at cost alone.…

A: Accounting principles refers to rules and regulations which are followed when financial data is…

Q: For all short exercises, assume the perpetual inventory system is used unless stated otherwise.…

A: Inventory Costing Method:   Under inventory costing method, the flow of cost of inventory is…

Q: periods of rising prices? • EX 6-15 Lower-of-cost-or-market inventory On the basis of the following…

A: THE COMPANY NEEDS TO VALUE ITS INVENTORY AT COST OR MARKET VALUE WHICH EVER IS LOWER .

Q: On the basis of the data shown below: Item Inventory Quantity Cost per Unit Market Value per Unit…

A: As per  lower of cost or market method, we need to consider inventory value at lower of market value…

Q: Part One: Explanation 1. If merchandise inventory is being valued at cost and the price level is…

A: FIFO, LIFO and weighted average are different cost flow assumptions with regard to the cost of…

Q: Which of the following is true about the issues of the gross profit method of estimating inventory?…

A: The gross profit method is a method for estimating the value of ending inventory and cost of…

Q: Lower-of-Cost-or-Market Method On the basis of the data shown below: Inventory Cost per Market Value…

A: The principle is inventory should be valued at lower or cost of reliasable value which ever is lower…

Q: Determine the proper unit inventory price in the following independent cases by applying the lower…

A: The inventory of a company will be valued in the balance sheet at lower of cost of net realizable…

Q: The following information for Tuell Company is available: Case 1 3 4 5 Cost $5.00 $5.00 $5.00 $5.00…

A: Under US GAAP, the LIFO technique uses the lower of cost or market, whereas the other methods use…

Q: Assume that a firm separately determined inventory under FIFO and LIFO and then compared the…

A: FIFO is a method of costing inventory in which the inventory purchased first is out first for…

Q: Requirement 1. Using the average-cost method, compute the cost of goods sold and ending inventory…

A: Inventory valuation methods are based on the flow of inventory used by the firm. There are several…

Q: Determine the proper inventory price per unit in the following independent cases by applying the…

A: Inventory is valued at cost of Net realizable value which ever is lower.…

Q: JFC Corporation values its inventory by using retail method:   1. How much is the ending inventory…

A: “Since you have posted a question with multiple sub-parts, we will solve the first three sub-parts…

Q: Ward Hardware does not expect costs to change dramatically and wants to use an inventory costing…

A: Perpetual Inventory System is an accounting system of valuing the inventory where there is a need…

Q: A firm utilizes a periodic inventory cost system with a Last-In, First-Out (LIFO) cost flow…

A: LIFO Method: Last in, first-out (LIFO) is a system of accounting for inventory sales in which the…

Q: Identify false statement(s) about estimating ending inventory using the retail inventory method.…

A: As per FIFO method, it is assumed that inventory purchased first is sold out first and ending…

Q: Required: a. Calculate cost of goods sold and ending inventory under the following cost flow…

A: a.   Units Rate cost Beginning Inventory 1000 $4 $4,000 Purchases 1200…

Q: a. Determine the inventory cost by the first-in, first-out method. Round your answer to the nearest…

A: The first in first out method is means when a company issue the inventory which is purchased first.…

Q: Lower-of-Cost-or-Market Method On the basis of the data shown below:   Item InventoryQuantity…

A: Calculation of value of inventory using lower of cost or market value:

Q: This exercise tests your understanding of the four inventory methods. List the name of the inventory…

A: Inventory costing is an important concept in accounting that deals with inventory valuation based on…

Q: (a), Your answer is partially correct. Try again. Compute the cost of the ending inventory and the…

A: FIFO method: The cost of ending inventory = $9,000 Cost of goods sold = Opening stock + Purchases -…

Q: 1.Calculate average-cost per unit. 2. From these data compute the ending inventory on each of the…

A: Average Cost per Unit - Formula Total Cost of Purchase Unit / Number of units Total Cost of Purchase…

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: Lower-of-Cost-or-Market Method On the basis of the following data, determine the value of the…

A: Total cost :- JFW1 = 58 x $29 = $1,682 SAW9 = 119 x $15 = $1,785   Total market value :- JFW1 =…

Q: The following data refer to Jacket Company’s ending inventory:   Item code Quantity Unit Cost…

A: Given,   Item code Quantity Unit Cost Unit Market Small 100   $114   $116   Medium 420   76…

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.