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| 1 | |
Based on an analysis of the future costs of raw (or direct) materials used in a business in which you are going to start up, it appears that current and anticipated technological changes will continue to reduce the price of the raw materials for 5 to 10 years into future. You've determined that the cost of maintaining a perpetual inventory system is not prohibitive, but you need to decide upon which inventory costing method (or assumption) you want to apply. Discuss your selection and the advantages it will provide, assuming all predictions are valid.
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| 2 | |
Describe the differences in inventories carried by a manufacturer and those carried by wholesalers and retailers.
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| 3 | |
Briefly describe each of the four inventory costing methods.
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| 4 | |
Describe the LIFO conformity rule.
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| 5 | |
How is the LIFO reserve computed and what purpose does it serve?
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| 6 | |
What is meant by the term "lower of cost or market" as it is applied to inventory?
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| 7 | |
What is meant by "net realizable value" as it is applied to inventory?
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| 8 | |
How is the inventory turnover computed and what does it measure?
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| 9 | |
How does an understatement of ending inventory affect the income statement and the balance sheet?
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