Listed below are five terms followed by a list of phrases that describe or characterize each of the
terms. Match each phrase with the correct term.
A) Always deducted after arriving at the calculation of the cost-to-retail percentage.
B) Deducted in arriving at ending inventory at retail.
C) Divide cost of goods available for sale by goods available at retail.
D) Cost-to-retail percentage is determined for all goods available for sale.
E) Change from LIFO to FIFO.
105) Requires retrospective treatment
106) Normal spoilage
107) Average cost retail method
108) Net markdown
109) Cost-to-retail percentage
Listed below are five terms followed by a list of phrases that describe or characterize each of the
terms. Match each phrase with the correct term.
A) Ideal for high volume, low cost inventory.
B) Gross profit percentage times selling price.
C) Gross profit divided by sales.
D) Elimination of a price reduction.
E) Gross profit divided by cost.
110) Retail inventory method
111) Markdown cancellation
112) Normal profit margin
113) Markup on cost
114) Gross profit ratio
Listed below are five terms followed by a list of phrases that describe or characterize each of the
terms. Match each phrase with the correct term.
A) Material inventory error discovered in a subsequent year.
B) Markdowns are not in the calculation of the cost-to-retail percentage.
C) Losses would be recognized when values decline.
D) Increase in selling price.
E) Not GAAP for annual financial statements.
115) Conventional retail method
116) Additional markup
117) Requires retrospective restatement
118) Lower of cost or NRV
119) Gross profit method
Listed below are five terms followed by a list of phrases that describe or characterize each of the
terms. Match each phrase with the correct term.
A) Selling price less costs to sell.
B) Original increase in selling price above cost.
C) Purchases are unrecorded.
D) Must be added to sales if sales are recorded net of discounts.
E) Approximates lower of average cost or market.
120) Employee discounts
121) Net realizable value
122) Conventional retail method
123) Inventory error, example
124) Initial markup
Listed below are five terms followed by a list of phrases that describe or characterize each of the
terms. Match each phrase with the correct term.
A) Selling price less costs to sell.
B) Reduction in selling price.
C) Requires base year retail to be converted to layer year retail and then to cost.
D) Usually impossible to calculate the effect on prior years’ financial statements.
E) Deducted from selling price when calculating NRV.
125) Change to LIFO from FIFO
126) Dollar-value LIFO retail method
127) Markdown
128) Costs to sell
129) NRV
Listed below are 10 terms followed by a list of phrases that describe or characterize the terms.
Match each phrase with the correct term.
A) Must be added to sales if sales are recorded net of discounts.
B) Selling price less costs to sell.
C) Not acceptable for the preparation of annual financial statements.
D) Usually impossible to calculate the effect on prior years’ financial statements.
E) Accounting change requiring retrospective treatment.
F) Lower of average cost or market.
G) Deducted in the retail column after the calculation of the cost-to-retail percentage.
H) Divide cost of goods available for sale by goods available at retail.
I) Reduction in selling price below the original selling price.
J) Requires base year retail to be converted to layer year retail and then to cost.
130) Dollar-value LIFO retail
131) Cost-to-retail percentage
132) Conventional retail method
133) Change from LIFO
134) Gross profit method
135) Net realizable value
136) Markdown
72
137) Change to LIFO from FIFO
138) Employee discounts
139) Normal spoilage
Use the following to answer the question(s) below:
Novelli’s Nursery has developed the following data in order to calculate the lower of cost or net
realizable value for its products. The individual products are listed within the categories of trees.
Selling
Price
Cost
Broad leaf trees:
Ash
$1,800
$1,700
Beech
2,200
1,600
Needle leaf trees:
Cedar
$2,500
$1,750
Fir
3,600
3,350
Fruit trees:
Apple
$1,800
$1,400
Cherry
2,300
1,800
The costs to sell are 10% of selling price.
140) Required: Determine the reported inventory value assuming the lower of cost or net
realizable value rule is applied to individual trees.
Ash
Beech
Cedar
Fir
Apple
Cherry
Inventory value
141) Required: Determine the reported inventory value assuming the lower of cost or net
realizable value rule is applied to categories of trees.
142) Required: Determine the reported inventory value assuming the lower of cost or net
realizable value rule is applied to the total inventory.
Use the following to answer the question(s) below:
Weldon Animal Feeds has developed the following data in order to calculate the lower of cost or
net realizable value for its products (in thousands). The products are listed within their category of
feed product.
Selling
Price
Cost
Large animal feed:
Cattle
$320
$160
Horse
400
400
Small animal feed:
Cat
$360
$320
Dog
120
90
Exotic pet feed:
Ferret
$140
$112
Iguana
70
48
The costs to sell are 20% of selling price.
143) Required: Determine the reported inventory value assuming the lower of cost or net
realizable value rule is applied to individual types of feeds.
Product
Cattle
Horse
Cat
Dog
Ferret
Iguana
Inventory value
144) Required: Determine the reported inventory value assuming the lower of cost or net
realizable value rule is applied to categories of feeds.
145) Required: Determine the reported inventory value assuming the lower of cost or net
realizable value rule is applied to the total inventory.
Use the following to answer the question(s) below:
Novelli’s Nursery has developed the following data for lower of cost or market for its products.
The individual types of trees are separated as to their categories:
Selling
Cost to
Price
Cost
Replace
Broad leaf trees:
Ash
$1,800
$1,000
$800
Beech
2,200
1,600
1,400
Needle leaf trees:
Cedar
$2,500
$1,750
$1,800
Fir
3,600
3,350
3,200
Fruit trees:
Apple
$1,800
$1,400
$1,300
Cherry
2,300
1,800
1,700
The costs to sell are 10% of the selling price, and the normal profit margin on all trees is 20% of the
selling price.
146) Required: Determine the reported inventory value assuming the lower of cost or market rule
is applied to individual tree products.
Ash
$ 800
Beech
1,400
1,980
Cedar
1,800
2,250
Fir
3,200
3,240
Apple
1,300
1,620
Cherry
1,700
Inventory value
147) Required: Determine the reported inventory value assuming the lower of cost or market rule
is applied to categories of trees.
148) Required: Determine the reported inventory value assuming the lower of cost or market rule
is applied to the total inventory.
Use the following to answer the question(s) below:
Weldon Animal Feeds has developed the following data to calculate lower of cost or market for its
products. The individual products are listed individually among their categories of feed (in
thousands):
Selling
Cost to
Price
Cost
Replace
Large animals:
Cattle
$320
$160
$170
Horse
400
400
325
Small animals:
Cat
$360
$320
$280
Dog
120
90
40
Exotic pets:
Ferret
$140
$112
$98
Iguana
70
48
21
The disposal costs are 20% of the selling price and the normal profit margin on all feed is 25% of
the selling price.
149) Required: Determine the reported inventory value assuming the lower of cost or market rule
is applied to individual animal feed products.
Product
or Market
Cattle
$170
$ 256
Horse
320
Cat
288
Dog
Ferret
112
Iguana
21
Inventory value