The primary purpose for using an inventory cost flowassumption is to:a. Parallel the physical flow of units of merchandise.b. Offset against revenue an appropriate cost of goodssold.c. Minimize income taxes.d. Maximize the reported amount of net income.

Q: Under a perpetual inventory system, what are the four inventory costing methods and how does each…

A: The four inventory costing methods are: Specific identification FIFO (First-In, First-Out), LIFO…

Q: Max Company has chosen to use an allowance account. When the cost of goods sold method is used with…

A: Full form of NRV is Net Realizable Value.

Q: Estimate ending inventory and cost of goods sold using the gross profit method.

A: Under gross profit method, calculation of cost of goods sold: Cost of goods sold = Sales* ( 1 -…

Q: Estimate ending inventory and cost of goods sold using the retail inventory method, applying the…

A: The retail inventory method is an accounting method used to estimate the value of a store's…

Q: Refer to the information in Exercise 6-7 and assume the periodic inventory system is used. Determine…

A: Introduction: FIFO: FIFO stands for First in First out  Which is used in valuating inventory.

Q: The inventory valuation method that has the advantages of assigning an amount to inventory on the…

A: Inventory means the stock of goods in hand . Goods means the thing in which the business deals and…

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

A: Solution:- The following should not be taken into account when determining the cost of inventory as…

Q: According to the expense recognition principle, inventory costs are expensed as cost of goods sold…

A: True

Q: In a periodic inventory system, the cost of merchandise purchased includes the cost of

A: Statement is TRUE  In a periodic inventory system, the cost of merchandise purchased includes the…

Q: Which inventory method provides a better matching ofcurrent costs with sales revenue on the income…

A: Inventory valuation is a method of finding the actual cost of the goods left unsold at the end of a…

Q: Determine the costs assigned to ending inventory and to cost of goods sold using LIFO.

A: Under LIFO method, Inventory purchased most recently are the first to be sold.

Q: Describe how to find inventory value using the average cost method.

A: Inventory: It is a list of goods or stock of goods which is held for doing a business. It includes…

Q: is a measure of inventory profitability that relates a gross margin to the cost of the inventory.

A: Inventory profitability means profits related to inventory cost which are calculated using these two…

Q: In a cost-divided income statement, changes in purchased goods (merchandise) must be reported under…

A: Following is the answer to the given question

Q: Briefly explain the usefulness of the inventory figure resulting from the application of lower of…

A: Net Realizable Value(NRV) refers to the inventory value which a business entity can realize from…

Q: T, F. Under the GAAP rule, inventories can be reported at above cost in the balance sheet. T, F. If…

A: Under GAAP rules , inventory is valued at cost or net realizable value which ever is lower due to…

Q: a. What value should be assigned to the ending inventory using FIFO? b. What value should be…

A: FIFO method: Under this method of inventory valuation, it is assumed that item of inventory…

Q: Which inventory method is being used when the natural flow of goods is followed? a.) Specific ID b.)…

A: Inventory Valuation: - This is defined as the valuation wherein the changes between the value of the…

Q: Discuss the treatment of freight-in, purchase returns, purchase discounts, normal spoilage, sales…

A: Retail inventory method: It takes into account all the retail amounts that is, the current selling…

Q: True or false If transportation costs are the responsibility of the buyer, they should be added to…

A: Correct answer-True

Q: Under the perpetual inventory system, cost of goods sold is debited when inventory is sold and…

A: Solution: Under perpetual inventory system, inventory is updated with every purchase and sales. Cost…

Q: of goods sold for the FIFO and the LIFO method based on the information

A: FIFO stands for First in first out . It means the inventory which is purchased first will be sold…

Q: How do calculate the Cost of Goods Sold without the beginning inventory nor the ending inventory??

A: Cost of goods sold is the total costs incurred on those units of goods or products which are sold by…

Q: 4. Using the FIFO method, the most recent purchases of inventory are assumed to be contained: a. on…

A: Under FIFO method, units purchased earlier are assumed to be sold first and the ending inventory…

Q: The retail inventory method would include which of the following in the calculation of the goods…

A: An accounting method which is being used for the purpose of measuring the merchandise in the store…

Q: Compute the cost of the ending inventory and the cost of goods sold under FIFÓ, LIFÓ, and…

A:

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: Explain an example how to calculate inventory turnover ratio.

A: Inventory turnover ratio : Inventory turnover is used to find how many times a company sold its…

Q: Explain what is meant by the cost rule or net realizable value, whichever is less, and how it is…

A: As per IAS -02 inventory should be measured on cost or Net realizable value whichever is lower.…

Q: Which inventory valuation model serves as a middle-of-the-road approach for taxes and income?…

A: When a corporation values its inventory using FIFO, it reports reduced COGS, which boosts its gross…

Q: If merchandise inventory is being valued at cost and the price level is decreasing, which of the…

A: Inventory cost is calculated by LIFO, FIFO and average cost method. Under LIFO method, inventory…

Q: Both the gross profit method and the retail inventory method provide a way to estimate ending…

A: Gross Profit Method: Under this method, the beginning inventory is added to the net purchases during…

Q: Which one the following types of cost is most likely to be included in determining the cost of…

A: Freight in cost is concerned with the inventory value and should be included in determining the cost…

Q: Compute for the cost of ending inventory and cost of goods sold under Moving average (Perpetual…

A: Moving average method of inventory valuation says that cost or value of inventory changes after each…

Q: Which of the following statements about the valuation of the inventory is correct, according to PAS…

A: Philippine Accounting Standards (PAS) 2 Inventories guides how to record or value inventories in the…

Q: Which of the following should be included in inventory on the balance sheet? Goods out on approval…

A: Goods purchased that are in transit F.O.B destination and raw materials will be recorded and…

Q: How do i calculate ending inventory and cost of goods sold using LIFO?

A: LIFO stands for last-in-first-out, in this method, goods which are produced at last are assumed to…

Q: Explain how the retail inventory method can be made to approximate the lower of cost or market rule.

A: Retail inventory method:   It takes into account. all the retail amounts that is, the current…

Q: Using LIFO method, determine cost of goods sold (COGS) and ending inventory (S).

A: C) Calculation of Cost of goods sold & ending inventory using LIFO: 127 units sold on April 15…

Q: Determine the value of the inventory at the lower of cost or market by applying lower of cost or…

A:

Q: Which of the following is not a step in the retail inventory method process? a.Compute the cost of…

A: The question is based on the concept of Cost Accounting.

Q: Differentiate between the specific identification, FIFO, LIFO, and average cost methods used to…

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

Q: Under what circumstances do generally accepted accounting principles permit the use of an inventory…

A: Solution-   688-8-3DQ SA -3946 SR- 2606     Generally accepted accounting principles allow the…

Q: Calculate the value of ding system. Ending inventory Cost of goods sold $ $

A: FIFO It is the method where we assume that the goods which were purchased earlier will be sold…

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.