Chapter 9, Problem 3Q

Which accounting method (net cost or gross invoice price) provides the most useful information?

What are the different methods of inventory valuation, and how do they affect the balance sheet and income statement? What factors should be considered when choosing a method of inventory valuation?

Explain the historical cost principle and discuss its advantages and disadvantages compared to other methods of accounting for assets.

Explain the relationship between tests of the acquisitionand payment cycle and tests of inventory. Give specific examples of how these two typesof tests affect each other.

In accounting for the acquisition of assets, the assets acquired are to be recorded at the                  ‘cost of acquisition’. How would you determine the ‘costs of acquisition’ of an asset?How are changes in accounting policies accounted for and disclosed?

Examine the impact on turnover ratios of various inventory cost flow assumptions and depreciation methodologies, among other things.