Exam 17: Merchandise Inventory

The ____________________ method of inventory valuation is a procedure developed for charging the current costs of goods against current sales prices.

A physical inventory should be taken at least annually to verify the goods on hand.

In applying the lower of cost or market rule,market is defined as the current replacement cost.

If a firm uses the FIFO method of inventory valuation for tax purposes,it must use the FIFO method for financial accounting.

Under a periodic inventory system,cost of goods sold is calculated based on the cost of available-for-sale units less the cost of ending inventory as identified through a physical inventory.

Cost ratio is calculated by

The lower the ending inventory valuation,the ____________________ the cost of goods sold.

A price reduction below the original markon is a ________________.

The FIFO method of inventory valuation focuses on the balance sheet;the most current costs are in ending inventory.

In periods of rising prices,the inventory valuation procedure that results in the highest net income is

Under the retail inventory method,if the cost-to-retail ratio is 60% and ending inventory at retail is $105,000,then estimated ending inventory is $63,000.