FAR 3 Module 3 concepts Flashcards
How to calculate Dollar Value LIFO
Price index
Dollar Value LIFO
What is the difference with regular LIFO
Dollar-Value LIFO focuses on inventory prices rather than units.
Generally, which of the Inventory costing methods approximates most closely the current cost for the following:
COGS
Ending Inventory
COGS : LIFO
Ending Inventory: FIFO
Which inventory method best reflects the economic value of ending inventory, assuming raw materials were purchased evenly throughout the year?
FIFO?
Specific Goods LIFO?
Dollar-value LIFO?
Weighted average?
Dollar-Value LIFO
What is the market Ceiling and the market floor when calculating for LIFO
LCM vs LCNRV
Market Floor: NRV - Normal Profit margin
NRV - (Sales price X profit margin %)
LCM: uses the ceiling and floor
If historical cost is present we compare this COST with the Market (middle of Ceiling, Replacement Cost, Floor)
LCNRV: Uses lower of cost or net realizable value
What is the appropriate accounting treatment for a purchase commitment when the market value of the inventory is less than the fixed purchase price at the end of the accounting period?
During periods of rising prices, when the FIFO inventory method is used, a perpetual inventory system results in an ending inventory cost that is:
Same?
Higher?
Lower?
Perpetual vs Periodic inventory system
What is the periodic COGS formula
In an inflationary environment, which inventory valuation method helps a company retain the most cash for financial accounting and tax purposes, and why?
What is the effect of the following if A company decided to change its inventory valuation method from FIFO to LIFO in a period of rising prices
Ending inventory
Net income
Which of the following are included to determine the total cost of inventory?
They are all included to the cost of inventory
