f this error on cost of goods sold for 2006, net income for 2006,
and assets at December 31, 2007, respectively, are
10) Assuming no beginning inventory, what can be said about th
e trend of inventory prices if cost of goods sold computed when
inventory is valued using the FIFO method exceeds cost of good
s sold when inventory is valued using the LIFO method?
11) Which method of inventory pricing best approximates specif
ic identification of the actual flow of costs and units in most ma
nufacturing situations?
12) All of the following costs should be charged against revenue
in the period in which costs are incurred EXCEPT for
13) In no case can “market” in the lower-of-cost-ormarket rule be more than
14) When the direct method is used to record inventory at marke
t
15) An item of inventory purchased this period for $15.00 has b
een incorrectly written down to its current replacement cost of $
10.00. It sells during the following period for $30.00, its normal
selling price, with disposal costs of $3.00 and normal profit of $
12.00. Which of the following statements is NOT true?
16) The retail inventory method is based on the assumption that
the
17) A major advantage of the retail inventory method is that it
18) In 2006, Lucas Manufacturing signed a contract with a suppl
ier to purchase raw materials in 2007 for $700,000. Before the D
ecember 31, 2006 balance sheet date, the market price for these
materials dropped to $510,000. The journal entry to record this s
ituation at December 31, 2006 will result in a credit that should
be reported
19) The cost of land typically includes the purchase price and all
of the following costs EXCEPT
20) Cotton Hotel Corporation recently purchased Holiday Hotel
and the land on which it is located with the plan to tear down the
Holiday Hotel and build a new luxury hotel on the site. The cost
of the Holiday Hotel should be
21) If a corporation purchases a lot and building and subsequentl
y tears down the building and uses the property as a parking lot,