31. Purchase returns and purchase discounts are ignored when computing cost-to-retail ratios for the retail method.
a. FALSE
b. TRUE
32. The cost-to-retail percentage used in the retail method to approximate average cost incorporates both markdowns and markups.
a. FALSE
b. TRUE
33. If the quantity of goods held in inventory decreased during the period, the dollar amount of ending inventory cannot exceed the dollar amount of beginning inventory.
a. FALSE
b. TRUE
34. When changing from the average cost method to FIFO, the current year's income includes the cumulative after-tax difference that would have resulted if the company had used FIFO in all prior years.
a. FALSE
b. TRUE
35. A change from LIFO to any other inventory method is accounted for retrospectively.
a. FALSE
b. TRUE
36. For a purchase commitment contained within a single fiscal year, if the market price is less than the contract price, the purchase is recorded at the contract price.
a. FALSE
b. TRUE
37. For a purchase commitment extending beyond the current fiscal year, if the market price on the purchase date declines from the previous year-end price, the purchase is recorded at the market price.
a. FALSE
b. TRUE
38. International Financial Reporting Standards allow the reversal of an inventory write-down.
a. FALSE
b. TRUE
39. In applying LCM, market cannot be:
a. Less than net realizable value
b. Greater than the normal profit
c. Less than the normal profit margin
d. Greater than net realizable value
40. In applying LCM, market cannot be:
a. Less than net realizable value minus a normal profit margin
b. Net realizable value less reasonable completion and disposal costs
c. Greater than net realizable value reduced by an allowance for normal profit margin
d. Less than cost
a. FALSE
b. TRUE
32. The cost-to-retail percentage used in the retail method to approximate average cost incorporates both markdowns and markups.
a. FALSE
b. TRUE
33. If the quantity of goods held in inventory decreased during the period, the dollar amount of ending inventory cannot exceed the dollar amount of beginning inventory.
a. FALSE
b. TRUE
34. When changing from the average cost method to FIFO, the current year's income includes the cumulative after-tax difference that would have resulted if the company had used FIFO in all prior years.
a. FALSE
b. TRUE
35. A change from LIFO to any other inventory method is accounted for retrospectively.
a. FALSE
b. TRUE
36. For a purchase commitment contained within a single fiscal year, if the market price is less than the contract price, the purchase is recorded at the contract price.
a. FALSE
b. TRUE
37. For a purchase commitment extending beyond the current fiscal year, if the market price on the purchase date declines from the previous year-end price, the purchase is recorded at the market price.
a. FALSE
b. TRUE
38. International Financial Reporting Standards allow the reversal of an inventory write-down.
a. FALSE
b. TRUE
39. In applying LCM, market cannot be:
a. Less than net realizable value
b. Greater than the normal profit
c. Less than the normal profit margin
d. Greater than net realizable value
40. In applying LCM, market cannot be:
a. Less than net realizable value minus a normal profit margin
b. Net realizable value less reasonable completion and disposal costs
c. Greater than net realizable value reduced by an allowance for normal profit margin
d. Less than cost
