PAIL ASSIGNMENT- Chapter 6 1. An item must possess two characteristics to be classified as inventory. What are these two characteristics? 2. What is just-in-time inventory management? What are its potential advantages? 3. What is the primary basis of accounting for inventories? Discuss the impact the use of LIFO has on taxes paid, cash flows, and the quality of earnings ratio relative to the impact of FIFO when prices are increasing. 4. 5. If you have 5 items on hand at the balance sheet date that cost $400 each and the current replacement cost is $350 per unit, under the lower-of-cost-or-market basis of accounting for inventories, what value should be reported for the five items on the balance sheet? Why? How does the average-cost method of inventory costing differ between a perpetual inventory system and a periodic inventory system? 6