Chapter 8-Inventories Speci

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1、Chapter8-Inventories:SpecialValuationIssues3copyStudent:___________________________________________________________________________1.Reportinginventoryatthelowerofcostormarketprovidesarepresentationallyfaithfulvalueofinventorythereforetheapplicationofthelowerofcostormarketru

2、leisconsistentwiththematerialityprinciple.  True    False 2.TheNetRealizableValueisconsideredtheceilingortheupperboundthatpreventsinventoryfrombeingvaluedatamounthigherthanwhatthecompanycouldreasonablysellit.  True    False 3.GAAPallowsacompanytoreportitsinventoryabovecostwi

3、thjustifiableexceptionswhichincludetheinabilitytodetermineacost.  True    False 4.Preciousmetalscanbevaluedabovecostsbecausetheyareimmediatelymarketableataquotedmarketprice.  True    False 5.Anauditorwouldmostlikelynotusethegrossprofitmethodtoverifytheaccuracyofthereportedco

4、stofinventory.  True    False 6.Thegrossprofitmethodisanexcellentmethodtodeterminethecostofinventoryforinterimfinancialstatements.Themethodofestimationmustbedisclosed.  True    False 7.Oneofthemainadvantagestotheretailinventorymethodoverthegrossprofitistheretailmethodusescur

5、rent-periodestimateswhereasthegrossprofitusedpastperiods.  True    False 8.Thegrossprofitmethodismoresensitivetopricechangesandproducesamoreaccurateestimateofcurrentperiodendinginventory.  True    False 9.Thepurposeofdollar-valueLIFOretailmethodistoeliminatetheeffectsofprice

6、changesduringaperiod.  True    False 10.Underthedollar-valueLIFOthecost-to-retailratioincludesnetmarkupsandnetmarkdownsbutincludesthebeginninginventory.  True    False 11.Apurchaseoncreditisomittedfromthepurchaseaccountinerror,endinginventoryiscorrect.Theeffectonthecurrentye

7、arfinancialstatementswouldbenetincomeisunderstatedbecausepurchasesareunderstatedalsocausingcostofgoodssoldtobeunderstated.  True    False 12.Endinginventoryisoverstatedduetoacostingerrorbutpurchasesarecorrect.Thebalancesheetwouldbecorrectinthesucceedingyearbecausetheprevious

8、yearserrorwouldhavebeencounterbalanced.  True    False 13.Acompanyusingthep