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Terms and phrases relating to concepts discussed in this chapter along with descriptions of those terms and phrases follow. Match each term, 1 through 15,
Terms and phrases relating to concepts discussed in this chapter along with descriptions of those terms and phrases follow. Match each term, 1 through 15, with the best description a through o.
Key Inventory Terms and Phrases
Key Inventory Terms and Phrases | Description of Terms and Phrases | |
---|---|---|
Answerabcdefghijklmno | 1. Net realizable value | a. Requires retroactive restatement of financial statements |
Answerabcdefghijklmno | 2. Lower-of-cost-or-market | b. Method for valuing inventory applying to LIFO and retail methods |
Answerabcdefghijklmno | 3. Allowance to reduce inventory to net realizable value | c. Cancellation of additional markup |
Answerabcdefghijklmno | 4. Gross profit method | d. Inventory estimation that is not acceptable under GAAP |
Answerabcdefghijklmno | 5. Estimated loss on purchase commitment | e. Method that approximates lower-of-cost-or-market |
Answerabcdefghijklmno | 6. Change in inventory method from average to FIFO | f. Not usually practical to retroactively restate or adjust financial statements |
Answerabcdefghijklmno | 7. Change from FIFO to LIFO | g. Reduction in original sales price |
Answerabcdefghijklmno | 8. Markdown | h. Selling price net of completion and disposal costs |
Answerabcdefghijklmno | 9. Additional markup cancellation | i. Theft of inventory that exceeds expectations |
Answerabcdefghijklmno | 10. Retail inventory methodConventional Method | j. Dollar amount required to purchase an inventory item |
Answerabcdefghijklmno | 11. Abnormal casualty loss | k. Recorded when contract price is greater than market price |
Answerabcdefghijklmno | 12. Replacement cost | l. Requires net markups and markdowns in cost-to-retail percentage |
Answerabcdefghijklmno | 13. Retail inventory methodAverage Method | m. Adjusted in accounting records in the period discovered |
Answerabcdefghijklmno | 14. Material error | n. Allows for estimation of inventory values when multiple items are purchased at one price |
Answerabcdefghijklmno | 15. Relative sales value method | o. Contra inventory account |
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