True or False: In determining lower-of-cost-or-market, market is the expected selling price under normal operations.
FALSE
True or False: Net Realizable Value is selling price less costs of completion and disposal.
TRUE
True or False: The primary motivation behind LCM is consistency.
FALSE
True or False: The purpose of ceilings and floors in LCM is to prevent profit distortion.
TRUE
True or False: Losses on reduction to LCM may be charged to either cost of goods sold or to a current loss account without distorting financial statement ratios.
FALSE
True or False: Inventory written down due to LCM may be written back up if market values go back up.
FALSE
True or False: In using the LIFO retail method, the current period cost-to-retail percentage includes both net markdowns and net markups.
TRUE
True or False: Purchase returns and purchase discounts are ignored when computing cost-to-retail ratios for the retail method.
FALSE
True or False: The cost-to-retail percentage used in the retail method to approximate average costs considers both markdowns and markups.
TRUE
True or False: A change from LIFO to any other inventory method is accounted for retrospectively.
TRUE
True or False: For a purchase commitment contained within a single fiscal year, if the market price is less than the contract price, the purchase is recorded at the contract price.
FALSE
True or False: For a purchase commitment extending beyond the current fiscal year, if the market price on the purchase date declines from the previous year-end price, the purchase is recorded at the market price.
TRUE
True or False: For a change from the average cost method to FIFO, the current year's income includes the cumulative after-tax difference that would have resulted if the company had used FIFO in all prior years.
FALSE
True or False: If the quantity of goods held in inventory decreased during the period, the dollar amount of ending inventory cannot exceed the dollar amount of beginning inventory.
FALSE
True or False: International Financial Reporting Standards allow the reversal of an inventory write-down.
TRUE
