How does the retail inventory method establish the lower-of-cost-or-market valuation for ending inventory?

1. The procedure is applied on a cost basis at the unit level.

2. By excluding net markups from the cost-to-retail ratio.

3. By excluding beginning inventory from the cost-to-retail ratio.

4. By excluding net markdowns from the cost-to-retail ratio.

The original cost of an inventory item is above the replacement cost and below the net realizable value. The net realizable value less the normal profit margin is above the replacement cost and the original cost. Using the lower of cost or market method the inventory item should be priced at its

1.Original cost.

2. Replacement cost.

3. Net realizable value.

4. Net realizable value less the normal profit margin.

BJ's stocks a changing variety of products. Which inventory costing method will be most likely to give Bj's the lowest ending inventory when its product lines are subject to specific price increases?

1.Specific identification.

2. Weighted-average.

3.Dollar-value LIFO.

4. FIFO periodic.

If ending inventory for 20x5 is understated because certain items were missed in the count, then:

1. Net income for 20x5 will be overstated.

2. CGS for 20x5 will be understated.

3.Net income for 20x5 will be understated, but net income for 20x6 will be unaffected.

4. Net income for 20x5 will be understated and CGS for 20x6 will be understated.