Chapter 9

Question 1

Product Cost

Answer 1

Is traced to an individual item and can be logically allocated and impact decision making.

Is an expense until sold

Question 2

Period Cost

Answer 2

Is not logically allocated to an idividual item and is written off as an expense in the reporting period

Question 3

QC that affects product/period cost

Answer 3

Relevance - whether it is a period or product cost depends on if it is a significant amount that has the ability to affect decision making

Question 4

Net Realisable Value

Answer 4

Estimated selling price of an item, less any costs incurrednin selling, distributing or marketing

Question 5

Reasons sell beow cost price

Answer 5

Near use by date
Damaged
Stock dirty or old
Newer model has come out

Question 6

QC for NRV

Answer 6

Faithful rep - represent real economic events that have taken place

Question 7

Inventory is valued at

Answer 7

Lower of Cost and NRV

Question 8

General journal entry for Inventory Write-down

Answer 8

Inventory write-down - Debit

Inventory - Credit