Under what circumstances is the relative sales value an appropriate basis for determining the price assigned to inventory?

Q: What factors might call for inventory valuation at salesprices (net realizable value or market…

A: Inventory: Inventory refers to the stock of a business which is traded to earn profits.

Q: Which of the three methods of inventory costing -FIFO, LIFO, or weighted average cost - will in…

A: FIFO - Inventory purchased first is assumed to be sold first. LIFO - Inventory recently purchased is…

Q: The conventional retail inventory method yields resultsthat are essentially the same as those…

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Q: When assessing inventory management policies, is the current ratio or acid-test ratio more…

A: Current Ratio = Current Ratio is Calculated by dividing the current Assets with current liabilties.…

Q: What is a LIFO inventory pool? How is the cost of ending inventory determined when pools are used?

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Q: Should inventory be measured initially at its market value or at cost?

A: Accounting:   Accounting is a system, or a process of collecting and organizing economic…

Q: Explain how the inventory cost flow assumption that was utilized might have an impact on liquidity…

A: Inventory Cost Flow Assumptions refer to the many ways for determining the cost of inventory 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: Discuss and explain the major uses of the gross profit method of inventory estimation.

A: Generally  we get gross profit  after trading a/c prepared it means after net sales  minus net…

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

A: Under the FIFO and LIFO, the obtained cost of goods sold can be higher or lower than the actual…

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: Which of the following is not utilized by lenders to control inventory that is being used in…

A: Trust receipts are not utilised by lenders.

Q: FIFO, average-cost, and LIFO methods are often usedinstead of specific identification for inventory…

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Q: What conditions must exist for the retail inventorymethod to provide valid results?

A: Retail inventory method: This method is like a gross profit method. It depends on the relationship…

Q: What are the reasons for making an estimate of the value of ending inventory?

A: Inventory- It is the amount of those units which is not sold yet by the entity or the units which…

Q: What does an “upstream” sale of inventory refer to and when is the profit recognized?

A: Upstream sale of inventory: When a subsidiary sells goods to a parent company, is referred as…

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

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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: What method of inventory valuation should be used for economic decision-making problems?

A: Inventory valuation is necessary for ascertaining the accurate cost of inventory so that accurate…

Q: What is the purpose of disclosing the difference between the reported LIFO inventory amounts and…

A: Perpetual and periodic inventory system: In merchandise business, there are two types of inventory…

Q: What is the measurement value of inventory? Select one: a. Expected Value b. Fair Value c.…

A: Inventory are the goods which the businesses held for the sale.

Q: The factor that determines whether goods should be included in a physical count of inventory is…

A: Physical count helps in tracking the inventory and efficiency of management control.

Q: Discuss the primary difference between U.S. GAAP and IFRS with respect to determining the cost of…

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Q: List and explain the substantive tests of Inventory and give example.

A: Substantive procedures are exercised by an auditor to detect material misstatements at the financial…

Q: What is the dollar-value method of LIFO inventory valuation?What advantage does the dollar-value…

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Q: Discuss the primary differences between U.S. GAAP and IFRS with respect to the lower of cost or net…

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

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Q: The inventory valuation method which assumes that the items purchased first are the first items to…

A: Valuation of an inventory depends upon which items are sold first in the inventory cycle. This gives…

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.