126.Net realizable value refers to
a.the net amount the company expects to realize from the sale.
b.the selling price.
c.the cost to replace the item.
d. the gross profit realized from the sale.
127.Which costing method
cannot
be used to determine the cost of inventory items before lower-of-cost-or-net realizable value market is applied?
a.Specific identification
b.FIFO
c.Average-cost
d.All of these methods can be used.
128.Inventory is reported in the financial statements at
a.cost.
b.net realizable value.
c.the higher-of-cost-or-net realizable value.
d.the lower-of-cost-or-net realizable value.
129.The lower-of-cost-or-net realizable value basis of valuing inventories is an example of
a.comparability.
b.the cost principle.
c.prudence.
d.consistency.
130.Never Company developed the following information about its inventories in applying the lower-of-cost-or-net realizable value (LCNRV) basis in valuing inventories:
Product Cost NRV
A$171,000$180,000
B120,000114,000
C240,000243,000
If Never applies the LCNRV basis, the value of the inventory reported on the statement of financial position would be
a.$531,000.
b.$537,000.
c.$525,000.
d.$543,000.
131.Paulson, Inc. has 8 computers which have been part of the inventory for over two years. Each computer cost ?600 and originally retailed for ?825. At the statement date, each computer has a net realizable value of ?350. What value should Paulson, Inc., have for the computers at the end of the year?
a.?2,000.
b.?2,800.
c.?4,800.
d.?6,600.
132.Paulson, Inc. has 8 computers which have been part of the inventory for over two years. Each computer cost ?600 and originally retailed for ?825. At the statement date, each computer has a net realizable value of ?350. How much loss should Paulson, Inc., record for the year?
a.?1,800.
b.?2,000.
c.?2,400.
d.?2,800.
133.Widner Company understated its inventory by $10,000 at December 31, 2013. It did not correct the error in 2013 or 2014. As a result, Widner's equity was:
a.understated at December 31, 2013, and overstated at December 31, 2014.
b.understated at December 31, 2013, and properly stated at December 31, 2014.
c.overstated at December 31, 2013, and overstated at December 31, 2014.
d.understated at December 31, 2013, and understated at December 31, 2014.
134.Understating beginning inventory will understate
a.assets.
b.cost of goods sold.
c.net income.
d.equity.
135.An error in the physical count of goods on hand at the end of a period resulted in a $10,000 overstatement of the ending inventory. The effect of this error in the current period is
Cost of Goods SoldNet Income
a. UnderstatedUnderstated
b. OverstatedOverstated
c. UnderstatedOverstated
d. OverstatedUnderstated