7.07- Inventory Estimation Methods Flashcards
1
Q
How do you calculate net mark-ups?
A
mark-ups - mark-up cancellations
2
Q
How do you calculate net mark-downs?
A
mark-downs - mark-down cancellations
3
Q
What is the LIFO retail inventory method?
A
It approximates the original cost
4
Q
What are the two differences between LIFO retail inventory method and LCM?
A
- net mark-ups and net mark-downs are both included in the cost to retail percentage calculation
- beginning inventory is NOT included in the cost to retail percentage calculation
5
Q
What is a firm purchase commitment?
A
a non-cancelable agreement
6
Q
What does the JE look like for a loss in a firm purchase commitment?
A
Debit- Estimated Loss (I/S)
Credit- Estimated Liability
