ACC 300 Chapter 9 Flashcards Preview

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Flashcards in ACC 300 Chapter 9 Deck (15)
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1
Q

Net realiizable value

A

Sales price-cost to sell

2
Q

Lower of cost and net realizable value

A

Compare cost in the books to market price

3
Q

Cost of goods sold method

A

Report the inventory at net realizable value in both the balance sheet and the cogs section of the income statement

4
Q

Loss method

A

Report the inventory decline with a debit to a loss accoint and credit an allowance account

5
Q

Ceiling for LCM

A

NRV

6
Q

Floor for LCM

A

Nrv-NPM

7
Q

NRV prevents

A

Overstatment of inventory and understatement of current period loss

8
Q

NRV-NPM

A

Prevents understatement of inventory and overstatement of current period loss

9
Q

Lower of cost or market

A

Used for lifo or retail inventory methods of costing inventory. Write inventory down when a devaluation occurs

10
Q

Gross profit method

A

Used when an estimate of a firms inventory is required

11
Q

Four items of info sufficient to estimate the cost of ending inventory

A

Cost of BI, cost of purchases, sales during period, markup

12
Q

Markup on cost to markup on retail

A

Markup on cost/(1+markup on cost)

13
Q

Markup on retail to markup on cost

A

Markup on retail/(1-markup on retail)

14
Q

Markup as a percentage of retail

A

Markup/selling price

15
Q

Markup as a percentage of cost

A

Markup/cost