F3M3

Question 1

Inventories must be

Answer 1

periodically counted

valued

and recorded

Question 2

Retail inventory

Answer 2

resold substantially the same way it was purchased

Question 3

Raw materials

Answer 3

held in use for production process

Question 4

WIP inventory

Answer 4

inventory that is in production, but not complete

Question 5

Finished goods

Answer 5

production inventory that is complete and ready for sale

Question 6

General rule for legal title

Answer 6

typically follows possession of goods

Question 7

FOB shipping point

Answer 7

Freight IN

title passes when delivered to common carrier (UPS truck)

Question 8

FOB destination

Answer 8

title passes when buyer physically receives goods

Question 9

Shipment of nonconforming goods

Answer 9

belongs to the seller, never the buyer

Question 10

consigned goods

Answer 10

owner is owner of the good while the consingee is a selling agent

Question 11

sales with mandatory buyback

Answer 11

buyer includes in inventory

Question 12

Valuation of inventory

Answer 12

if cost will be recovered with a normal profit, recognize at cost

even if the replacement cost is lower

Question 13

Cost includes freight in for inventory

Question 14

Exceptions to cost basis of inventory

Answer 14

Measured at NRV

metals and farm products

Question 15

What is the NRV

Answer 15

selling price - costs to dispose

Question 16

When do you recognize loss in inventory

Answer 16

immediately

Question 17

can you reverse inventory write-downs?

Answer 17

no

Question 18

What inventory method for FIFO/WA

Answer 18

LCNRV

Question 19

What inventory method LCM

Answer 19

LIFO/Retail

Question 20

Market value

Answer 20

generally means current replacement cost

the middle of the replacement cost, market ceiling, and market floor

Question 21

Calculate Market Celing

Answer 21

NRV

Question 22

Calculate market floor

Answer 22

NRV - profit

Question 23

Inventory disclosure material loss

Answer 23

disclose
record loss
record liability

Question 24

Periodic inventory

Answer 24

1 PE

Purchases

Determined by physical count at least annually

Question 25

Perpetual Inventory

Answer 25

2 entries

inventory updated for each sale or purcahse

Question 26

under US GAAP, the cost flow assumption used by a company ___ (is/is not)___ required to have a rational relationship with physical inventory flows

Answer 26

IS NOT

Question 27

Specific identification method

Answer 27

no estimation, unquiely identified (VIN #)

Question 28

What method has same for periodic and perpetual

Answer 28

FIFO

Question 29

Weighted average what method

Answer 29

periodic, calculate cost by unit

Question 30

Moving average what method

Answer 30

perpetual; computes weighted cost after each purchase

Question 31

LIFO

Answer 31

LCM

beneficial for TAX use

Question 32

Dollar Value LIFO

Answer 32

inventory is measured in dollars and adjusted for changing price levels

Question 33

Price index dollar value LIFO formula

Answer 33

EI @ current/EI @ base

Question 34

Gross profit method is used when

Answer 34

quarterly and periodic

Question 35

Purchase agreements

Answer 35

legally enforceable

have to be disclosed

loss recognized immediately