Use the following as a self-check while working through Chapter 6
- What three inventory cost flow assumptions can be used in perpetual inventory systems?
- What impact does the use of different inventory cost flow assumptions have on financial statements?
- What is the meaning of the term lower of cost and net realizable value, and how is it calculated?
- What is the effect on net income of an error in ending inventory values?
- What methods are used to estimate ending inventory?
- What ratio can be used to evaluate the liquidity of merchandise inventory?
- What inventory cost flow assumptions can be used in a periodic inventory system?
NOTE: The purpose of these questions is to prepare you for the concepts introduced in the chapter. Your goal should be to answer each of these questions as you read through the chapter. If, when you complete the chapter, you are unable to answer one or more the Concept Self-Check questions, go back through the content to find the answer(s). Solutions are not provided to these questions.