6 ) Assuming that the ideal measure of short-term receivables in the balance sheet is the discounted value of the cash to be received in the future , failure to follow this practice usually does NOT make the balance sheet misleading because 7 ) Eller Co . received merchandise on consignment . As of January 31 , Eller included the goods in inventory , but did NOT record the transaction . The effect of this on its financial statements for January 31 would be 8 ) If the beginning inventory for 2006 is overstated , the effects of this error on cost of goods sold for 2006 , net income for 2006 , and assets at December 31 , 2007 , respectively , are 9 ) The accountant for the Orion Sales Company is preparing the income statement for 2007 and the balance sheet at December 31 , 2007 . Orion uses the periodic inventory system . The January 1 , 2007 merchandise inventory balance will appear 10 ) The use of a Discounts Lost account implies that the recorded cost of a purchased inventory item is its 11 ) When using the periodic inventory system , which of the following generally would NOT be separately accounted for in the computation of cost of goods sold ? 12 ) The use of a Purchase Discounts account implies that the recorded cost of a purchased inventory item is its 13 ) In no case can " market " in the lower-of-cost-or-market rule be more than 14 ) When the direct method is used to record inventory at market 15 ) Designated market value 16 ) The retail inventory method is based on the assumption that the 17 ) In 2006 , Lucas Manufacturing signed a contract with a supplier to purchase raw materials in 2007 for $ 700,000 . Before the December 31 , 2006 balance sheet date , the market price for these materials dropped to $ 510,000 . The journal entry to record this situation at December 31 , 2006 will result in a credit that should be reported 18 ) The gross profit method of inventory valuation is invalid when 19 ) Which of the following is NOT a major characteristic of a plant asset ? 20 ) The cost of land does NOT include