Exam 8: Valuation of Inventories: a Cost-Basis Approach

The cost flow assumption adopted must be consistent with the physical movement of the goods.

Which method of inventory pricing best approximates specific identification of the actual flow of costs and units in most manufacturing situations?

When using a perpetual inventory system, freight charges on goods purchased are debited to Freight-In.

The International Accounting Standards Board requires the specific identification method when unit price is low, inventory turnover is high, and inventory quantities are large.

The International Accounting Standards Board (IASB) requires the specific identification method of inventory costing where individual items of inventory can be identified and costed.

A trade discount that is granted as an incentive for a first-time customer or as a reward for large order should be accounted for by the purchaser as revenue.

Oats Company offers a trade discount to its customers as a reward for large orders.According to the International Accounting Standards Board (IASB) how should the customers of Oats Company account for these trade discounts?

When using a perpetual inventory system,

Where should raw materials be classified on the statement of financial position?

Culver Company purchases the majority of its inventory from three primary suppliers for re-sale to customers around the world.Culver Company's statement of financial position will include

Under IFRS, agricultural inventories, such as wheat, oranges, etc., are recorded at their fair value less estimated selling costs at the point of harvest.

Oats and Honey Company produces healthy snacks for sale throughout the United States and Europe.The International Accounting Standards Board (IASB) prohibits Oats and Honey from using which of the following cost flow assumptions for its inventory?

Interest costs incurred to manufacture large quantities of inventory that are produced routinely should be capitalized.

The pricing of issues from inventory must be deferred until the end of the accounting period under the following method of inventory valuation

Which method may be used to record cash discounts a company receives for paying suppliers promptly?

Which of the following is a period cost?

Tanner Corporation's inventory cost on its statement of financial position was lower using first-in, first-out than it would have been using average cost.Assuming no beginning inventory, in what direction did the cost of purchases move during the period?

Computers For You is a retailer specializing in selling computers and related equipment.Which of the following would not be reported in the merchandise inventory account reported on the statement of financial position for Computers For You at December 31, 2015?

If a supplier ships goods f.o.b.destination, title passes to the buyer when the supplier delivers the goods to the common carrier.

Goods in transit, shipped FOB shipping point, are included in the buyer's statement of financial position at the time of delivery to the common carrier.