Module 4 Inventories Flashcards
1
Q
How should inventory be valued at period end?
A
At the lower of cost and net realisable value (NRV)
At period end, the value of closing inventories must be calculated
2
Q
What is net realisable value (NRV)?
A
The estimated selling price in the ordinary course of business less the estimated cost of completion and estimated costs necessary to make the sale
Selling price - cost of completion - cost necessary to make sale = NRV
3
Q
What are the two gross profit ratios?
A
Margin = GP/Sales x 100
Mark up = GP/Cost of sales x 100
Sale - cost of sales = GP
