Reference no: EM132969855

Problem 1: Lower of cost or net realizable value

a) Is most conservative is applied to the total inventory.

b) Is most conservative if applied to major categories of inventory.

c) Is most conservative if applied to individual items of inventory.

d) Must be applied to major categories for taxes.

Problem 2: The cost of inventory is the sum of:

a) Costs of purchase and costs of conversion.

b) Direct costs, indirect costs, and other costs (allocated production overheads).

c) Costs of purchase, costs of conversion (allocated production overheads) and other costs incurred in bringing the inventory to their present location and condition.

d) Cost of purchase only.

Problem 3: A firm using the perpetual inventory method retuned defective merchandise costing P5,000 to one of its suppliers. The entry to record this transaction will include a debit to

a) Accounts receivable

b) Inventory

c) Purchase returns and allowances

d) Accounts payable