Table of contents

Prepare for your exams

Upload your syllabus and get recommendations on what to study and when. No syllabus? Sharing your exam schedule works too.

Skip topic navigation

1. Introduction to Accounting(0)

Welcome!
(0)

Types of Accounting
(0)

Business Organization
(0)

Useful Information
(0)

Fundamental Accounting Equation
(0)

The Financial Statements
(0)

Sample Financial Statements - Coca Cola
(0)

2. Transaction Analysis(0)

Journal Entries: Debits and Credits
(0)

Accounting Flow Intuition: BASE Formula
(0)

Journal Entries: Business Formation Example
(0)

Trial Balance
(0)

Classified Balance Sheet Components
(0)

3. Accrual Accounting Concepts(0)

Accrual Accounting vs. Cash Basis Accounting
(0)

Revenue Recognition and Expense Recognition
(0)

Introduction to Adjusting Journal Entries and Prepaid Expenses
(0)

Adjusting Entries: Supplies
(0)

Adjusting Entries: Unearned Revenue
(0)

Adjusting Entries: Accrued Expenses
(0)

Adjusting Entries: Accrued Revenues
(0)

Adjusting Entries: Depreciation
(0)

Summary of Adjusting Entries
(0)

Unadjusted vs Adjusted Trial Balance
(0)

Closing Entries
(0)

Post-Closing Trial Balance
(0)

4. Merchandising Operations(0)

Service Company vs. Merchandising Company
(0)

Net Sales
(0)

Cost of Goods Sold - Perpetual Inventory vs. Periodic Inventory
(0)

Perpetual Inventory - Purchases
(0)

Perpetual Inventory - Freight Costs
(0)

Perpetual Inventory - Purchase Discounts
(0)

Perpetual Inventory - Purchasing Summary
(0)

Periodic Inventory - Purchases
(0)

Periodic Inventory - Freight Costs
(0)

Periodic Inventory - Purchase Discounts
(0)

Periodic Inventory - Purchasing Summary
(0)

Single-step Income Statement
(0)

Multi-step Income Statement
(0)

Comprehensive Income
(0)

5. Inventory(0)

Merchandising Company vs. Manufacturing Company
(0)

Physical Inventory Count, Ownership of Goods, and Consigned Goods
(0)

Specific Identification
(0)

Periodic Inventory - FIFO, LIFO, and Average Cost
(0)

Perpetual Inventory - FIFO, LIFO, and Average Cost
(0)

Financial Statement Effects of Inventory Costing Methods
(0)

Lower of Cost or Market
(0)

Inventory Errors
(0)

6. Internal Controls and Reporting Cash(0)

Fraud and the Fraud Triangle
(0)

Sarbanes-Oxley Act
(0)

Five Components of Internal Controls
(0)

Principles of Control Activities
(0)

Limitations of Internal Controls
(0)

Petty Cash
(0)

Bank Reconciliation
(0)

Journal Entries for Bank Reconciliation
(0)

7. Receivables and Investments(0)

Types of Receivables
(0)

Net Accounts Receivable: Direct Write-off Method
(0)

Net Accounts Receivable: Allowance for Doubtful Accounts
(0)

Net Accounts Receivable: Percentage of Sales Method
(0)

Net Accounts Receivable: Aging of Receivables Method
(0)

Notes Receivable
(0)

Introduction to Investments in Securities
(0)

Trading Securities
(0)

Available-for-Sale (AFS) Securities
(0)

Held-to-Maturity (HTM) Securities
(0)

Equity Method
(0)

8. Long Lived Assets(0)

Initial Cost of Long Lived Assets
(0)

Basket (Lump-sum) Purchases
(0)

Ordinary Repairs vs. Capital Improvements
(0)

Depreciation: Straight Line
(0)

Depreciation: Declining Balance
(0)

Depreciation: Units-of-Activity
(0)

Depreciation: Summary of Main Methods
(0)

Depreciation for Partial Years
(0)

Retirement of Plant Assets (No Proceeds)
(0)

Sale of Plant Assets
(0)

Change in Estimate: Depreciation
(0)

Intangible Assets and Amortization
(0)

Natural Resources and Depletion
(0)

Asset Impairments
(0)

Exchange for Similar Assets
(0)

9. Current Liabilities(0)

Types of Liabilities
(0)

Notes Payable
(0)

Payroll and Payroll Taxes
(0)

Sales Tax Payable
(0)

Current Portion of Long Term Debt
(0)

Contingent Liabilities
(0)

Estimated Liabilities: Warranties
(0)

10. Time Value of Money(0)

Time Value of Money Equations
(0)

Using Time Value of Money Tables
(0)

11. Long Term Liabilities(0)

Introduction to Bonds and Bond Characteristics
(0)

Face Value Bonds
(0)

Discount on Bonds
(0)

Premium on Bonds
(0)

Zero Coupon Bonds
(0)

Straight Line Amortization of Bond Premium or Discount
(0)

Effective Interest Amortization of Bond Premium or Discount
(0)

Redeeming Bonds before Maturity
(0)

12. Stockholders' Equity(0)

Characteristics of a Corporation
(0)

Shares Authorized, Issued, and Outstanding
(0)

Issuing Par Value Stock
(0)

Issuing No Par Value Stock
(0)

Issuing Common Stock for Assets or Services
(0)

Retained Earnings
(0)

Retained Earnings: Prior Period Adjustments
(0)

Preferred Stock
(0)

Treasury Stock
(0)

Dividends and Dividend Preferences
(0)

Stock Dividends
(0)

Stock Splits
(0)

13. Statement of Cash Flows(0)

Introduction to the Statement of Cash Flows
(0)

Operating Activities: Indirect Method
(0)

Operating Activities: Direct Method
(0)

Investing Activities
(0)

Financing Activities
(0)

Significant Noncash Activities
(0)

14. Financial Statement Analysis(0)

Horizontal Analysis
(0)

Vertical Analysis
(0)

Common-sized Statements
(0)

Trend Percentages
(0)

Discontinued Operations and Extraordinary Items
(0)

Introduction to Ratios
(0)

Ratios: Earnings Per Share (EPS)
(0)

Ratios: Working Capital and the Current Ratio
(0)

Ratios: Quick (Acid Test) Ratio
(0)

Ratios: Gross Profit Rate
(0)

Ratios: Profit Margin
(0)

Ratios: Quality of Earnings Ratio
(0)

Ratios: Inventory Turnover
(0)

Ratios: Average Days in Inventory
(0)

Ratios: Accounts Receivable (AR) Turnover
(0)

Ratios: Average Collection Period (Days Sales Outstanding)
(0)

Ratios: Return on Assets (ROA)
(0)

Ratios: Total Asset Turnover
(0)

Ratios: Fixed Asset Turnover
(0)

Ratios: Profit Margin x Asset Turnover = Return On Assets
(0)

Ratios: Accounts Payable Turnover
(0)

Ratios: Days Payable Outstanding (DPO)
(0)

Ratios: Times Interest Earned (TIE)
(0)

Ratios: Debt to Asset Ratio
(0)

Ratios: Debt to Equity Ratio
(0)

Ratios: Payout Ratio
(0)

Ratios: Dividend Yield Ratio
(0)

Ratios: Return on Equity (ROE)
(0)

Ratios: DuPont Model for Return on Equity (ROE)
(0)

Ratios: Free Cash Flow
(0)

Ratios: Price-Earnings Ratio (PE Ratio)
(0)

Ratios: Book Value per Share of Common Stock
(0)

Ratios: Cash to Monthly Cash Expenses
(0)

Ratios: Cash Return on Assets
(0)

Ratios: Economic Return from Investing
(0)

Ratios: Capital Acquisition Ratio
(0)

15. GAAP vs IFRS(0)

GAAP vs. IFRS: Introduction
(0)

GAAP vs. IFRS: Classified Balance Sheet
(0)

GAAP vs. IFRS: Recording Differences
(0)

GAAP vs. IFRS: Adjusting Entries
(0)

GAAP vs. IFRS: Merchandising
(0)

GAAP vs. IFRS: Inventory
(0)

GAAP vs. IFRS: Fraud, Internal Controls, and Cash
(0)

GAAP vs. IFRS: Receivables
(0)

GAAP vs. IFRS: Long Lived Assets
(0)

GAAP vs. IFRS: Liabilities
(0)

GAAP vs. IFRS: Stockholders' Equity
(0)

GAAP vs. IFRS: Statement of Cash Flows
(0)

GAAP vs. IFRS: Analysis and Income Statement Presentation
(0)

5. Inventory

Lower of Cost or Market

5. Inventory

Lower of Cost or Market: Videos & Practice Problems

Video Lessons Practice Worksheet

Lower of Cost or Market Practice Problems

20 problems

Problem 1Multiple Choice

What does the rule of conservatism in accounting emphasize?

Problem 2Multiple Choice

Which of the following best describes the 'lower of cost or market' rule in inventory valuation?

Problem 3Multiple Choice

A company estimates it can sell its inventory for \$100,000 with disposal costs of \$10,000. What is the net realizable value of the inventory?

Problem 4Multiple Choice

If the historical cost of inventory is \$50,000 and the net realizable value is \$45,000, at what value should the inventory be reported?

Problem 5Multiple Choice

A company writes down its inventory from \$60,000 to \$50,000. How should this be recorded in the journal entries?

Problem 6Multiple Choice

If inventory is marked down from a historical cost of \$75,000 to a market value of \$65,000, what is the loss amount?

Problem 7Multiple Choice

What is the effect of a write-down of inventory on the financial statements?

Problem 8Multiple Choice

A company has inventory with a historical cost of \$100,000 and a market value of \$90,000. What should the company do according to the rule of conservatism?

Problem 9Multiple Choice

A retailer purchased goods for \$40,000. Due to market conditions, the goods can now be sold for \$35,000 with disposal costs of \$2,000. What is the inventory value according to the lower of cost or market rule?

Problem 10Multiple Choice

A company has inventory valued at \$120,000. The market value drops to \$110,000. How should the company record this change?

Problem 11Multiple Choice

Why is the rule of conservatism important in accounting?

Problem 12Multiple Choice

What is the primary purpose of the 'lower of cost or market' rule?

Problem 13Multiple Choice

A company estimates it can sell its inventory for \$200,000 with disposal costs of \$20,000. What is the net realizable value of the inventory?

Problem 14Multiple Choice

If the historical cost of inventory is \$30,000 and the net realizable value is \$25,000, at what value should the inventory be reported?

Problem 15Multiple Choice

A company writes down its inventory from \$90,000 to \$80,000. How should this be recorded in the journal entries?

Problem 16Multiple Choice

If inventory is marked down from a historical cost of \$95,000 to a market value of \$85,000, what is the loss amount?

Problem 17Multiple Choice

What is the effect of a write-down of inventory on the financial statements?

Problem 18Multiple Choice

A company has inventory with a historical cost of \$150,000 and a market value of \$140,000. What should the company do according to the rule of conservatism?

Problem 19Multiple Choice

A retailer purchased goods for \$60,000. Due to market conditions, the goods can now be sold for \$55,000 with disposal costs of \$3,000. What is the inventory value according to the lower of cost or market rule?

Problem 20Multiple Choice

A company has inventory valued at \$200,000. The market value drops to \$190,000. How should the company record this change?

rank

Financial Statement Effects of Inventory Costing Methods Practice Problems Inventory Errors Practice Problems

Download the Mobile app

Accessibility

Privacy

Do not sell my personal information