Quiz 9.188 – Steps in the Gross Profit Method
Intermediate Accounting
Spiceland, Nelson, and Thomas
10th Edition
Outline the steps in the gross profit method of estimating ending inventory and indicate when it is used.
Outline the steps in the gross profit method of estimating ending inventory and indicate when it is used.
Differentiate the gross profit method and retail method in estimating ending inventory.
Explain the financial reporting needed if a company changes to or from the LIFO inventory method.
Explain the financial reporting needed if material misstatements are in previous financial statements included for comparative purposes in the current year’s financial statements.
The cost-to-retail percentage in the average cost retail method will be lower as to the percentage in the conventional retail method if there’s a net markdown. True or false?
The current year’s income includes the cumulative after-tax difference if FIFO is used instead of the average cost method. True or false?
If a change in inventory method causes an increase to the balance of inventory, it would be a debit to inventory and a credit to the cost of goods sold. True or false?
What is lacking in an argument against the use of the lower of cost or net realizable value rule?
This is true if management has adopted a policy of reporting its unsold inventory at the lower of FIFO cost or the most recent selling price of the inventory in the current year.
This is true if management has adopted a policy of reporting its unsold inventory at the lower of LIFO cost or the most recent selling price of the inventory in following year.