Multiple Choice Question 27

Net realizable value is

A . acquisition cost plus costs to complete and sell.

B.	selling price.

C. selling price plus costs to complete and sell.

D. selling price less costs to complete, sell, and transport.

Multiple Choice Question 30

In no case can "market" in the lower-of-cost-or-market rule be more than

A. estimated selling price in the ordinary course of business, less reasonably predictable costs of completion and disposal, an allowance for an approximately normal profit margin, and an adequate reserve for possible future losses.

B. estimated selling price in the ordinary course of business.

C. estimated selling price in the ordinary course of business, less reasonably predictable costs of completion and disposal.

D. estimated selling price in the ordinary course of business, less reasonably predictable costs of completion and disposal and an allowance for an approximately normal profit margin.

Multiple Choice Question 31

The designated market value

A. is always the middle value of replacement cost, net realizable value, and net realizable value less a normal profit margin.

B. should always be equal to net realizable value.

C. should always be equal to net realizable value less a normal profit margin.

D. may sometimes exceed net realizable value.

Multiple Choice Question 35

What is the rationale behind the ceiling when applying the lower-of-cost-or-market method to inventory?

A. Allows for a normal profit to be earned.

B.	Prevents overstatement of the value of obsolete or damaged inventories.

C. Allows for items to be valued at replacement cost.

D. Prevents understatement of the inventory value.

Multiple Choice Question 36

When inventory declines in value below original (historical) cost, and this decline is considered other than temporary, what is the maximum amount that the inventory can be valued at?

A. Historical cost.

B. Sales price.

C. Net realizable value.

D. Net realizable value reduced by a normal profit margin.

Multiple Choice Question 55

To produce an inventory valuation which approximates the lower of cost or market using the conventional retail inventory method, the computation of the ratio of cost to retail should

A. ignore both markups and markdowns.

B	. include markups and markdowns.

C.	include markups but not markdowns.

D.	include markdowns but not markups.