Chapter 9

Question 1

Lower of Cost of Market

Answer 1

value goods at cost or cost to replace, whichever is lower

Question 2

Can only use replacement cost if between ceiling or floor (true or false)

Answer 2

true

Question 3

Ceiling

Answer 3

Net realizable value (fair market value)

Question 4

Why use ceiling?

Answer 4

prevents the overstatement of the value of obsolete, damaged, or shop-worn inventories

Question 5

Floor

Answer 5

Net realizable value-normal profit margin

Question 6

Why use floor?

Answer 6

Deters understatement of inventory and overstatement of the loss in the current period

Question 7

Inventory Write Downs

Answer 7

write inventory down from cost to market

Question 8

Journal Entry for Inventory write-down using COGS Method

Answer 8

Cost of Goods Sold

Inventory

Question 9

Journal Entry for Inventory write-down using Loss Method

Answer 9

Loss Due to Decline in Inventory

Allowance to Reduce Inventory to Market

Question 10

Percent Cost

Answer 10

% Selling Price / (1- % Selling Price)

Question 11

Percent Selling Price

Answer 11

% Cost / (1+ % Cost)

Question 12

Inventory Turnover Ratio

Answer 12

COGS/ Average Inventory