ACG 4101 Final Exam Question and
answers 100% correct
Inventory must be reported at - correct answer ✔the lower of cost and net
realizable value (according to GAAP)
What does the utility of a company result from ? - correct answer ✔from the
ultimate sale of that inventory
What impairs utility - correct answer ✔deterioration, obsolescence, changes
in price levels, or any situation that might compromise the inventory's salability
impairs that utility.
Why do we use lower of cost and net realizable method - correct answer ✔It
avoids reporting inventory at an amount greater than the benefits it can
provide. Reporting inventories this way causes losses to be recognized in the
period the value of inventory declines below its cost rather than in the period
in which the goods ultimately are sold.
how to get NRV - correct answer ✔Selling price - estimated costs to sell
If inventory write-downs are commonplace for a company, - correct answer
✔losses usually are included in cost of goods sold
inventory estimation techniques - correct answer ✔gross profit method and
retail inventory method
answers 100% correct
Inventory must be reported at - correct answer ✔the lower of cost and net
realizable value (according to GAAP)
What does the utility of a company result from ? - correct answer ✔from the
ultimate sale of that inventory
What impairs utility - correct answer ✔deterioration, obsolescence, changes
in price levels, or any situation that might compromise the inventory's salability
impairs that utility.
Why do we use lower of cost and net realizable method - correct answer ✔It
avoids reporting inventory at an amount greater than the benefits it can
provide. Reporting inventories this way causes losses to be recognized in the
period the value of inventory declines below its cost rather than in the period
in which the goods ultimately are sold.
how to get NRV - correct answer ✔Selling price - estimated costs to sell
If inventory write-downs are commonplace for a company, - correct answer
✔losses usually are included in cost of goods sold
inventory estimation techniques - correct answer ✔gross profit method and
retail inventory method
