Reference no: EM132969906

Problem 1: The amount of any write-down of inventory to net realizable value and all losses of inventory shall be:

a) Recognized as operating expense in the period the write-down or loss occurs.

b) Recognized as other expense in the period the write-down or loss occurs.

c) Recognized as component of cost of goods sold in the period the write-down or loss occurs.

d) Deferred until the related inventory is sold.

Problem 2: According to the net method, which of the following items should be included in the cost of inventory?

a) Freight costs = YES; Purchase discounts not taken = NO

b) Freight costs = YES; Purchase discounts not taken = YES

c) Freight costs = NO; Purchase discounts not taken =YES

d) Freight costs = NO; Purchase discounts not taken = NO

Problem 3: When determining the net realizable value of inventory, estimates must be made of the following:

I. Estimated costs of completion

II. Expected replacement cost

III. Expected normal profit margin

IV. Estimated selling price

a) I, II, III, and IV

b) I, II, III, only

c) I and IV only

d) I, III, and IV only