Far 4***

Front 1

Current Ratio

Back 1

Current assets / Current Liabilities

Front 2

Quick Ratio

Back 2

Cash + Net AR + Marketable Securities

/

Current Liabilities

Front 3

Short-Term debt that is expected to be refinanced:

Back 3

Should be classified as long-term

Front 4

FOB Shipping Point

Back 4

Title passes to the buyer when the seller delivers the goods to the common carrier. Goods shipped in this manner should be included in the buyer's inventory upon shipment.

Front 5

FOB Destination

Back 5

Title passes to the buyer when the buyer receives the goods from the common carrier.

Front 6

Valuation of Inventory

Back 6

U.S. GAAP requires that inventory be stated at its cost. Where evidence indicates that cost will be recovered with an approximately normal profit on the sale in the ordinary course of business, no loss should be recognized even though replacement or reproduction costs are lower.

Front 7

Departure from the cost basis

Back 7

In the ordinary course of busines, when the utility of goods is no longer as great as their cost, a departure from the cost basis principle of measuring inventory is required.

This is usually accomplished by stating such goods at market value or net realizable value.

The purpose of reducing inventory to the lower of cost or market or the lower of cost and NRV is to show the probably loss sustained (conservatism) in the period in which the loss occurred (matching principle).

Front 8

Reversal of Inventory Write-Downs

Back 8

U.S. GAAP: Does not permit the reversal of write downs.

IFRS: Allows the reversal of inventory write-downs for subsequent recoveries of inventory value which is limited to the amount of the original write-down and is recorded as a reduction of total inventory costs on the income statement (COGS).

Front 9

Methods used to determine the cost of inventory:

Back 9

1. FIFO

2. LIFO (not permitted by IFRS)

3. Average Cost

4. Retail inventory method

Front 10

Lower of cost or market - Determining market value

(US GAAP ONLY)

Back 10

The term market in the phrase lower of cost or market means current replacement cost, provided the current replacement ost does not exceed NRV (the 'market ceiling') or fall below NRV reduced by normal PM (the 'market floor')

Front 11

Market value

Back 11

Median of an inventory item's replacement cost, its market ceiling, and its market floor

Front 12

Replacement cost

Back 12

Cost to purchase the item of inventory as of the valuation date

Front 13

Market Ceiling

Back 13

An item's net selling price less the costs to complete and dispose (called NRV)

Front 14

Market Floor

Back 14

Market Ceiling less normal PM

Front 15

Lower of cost and NRV (IFRS and US GAAP)

NRV is:

Back 15

An item's net selling price less the costs to complete and dispose of the inventory. NRV is the same as the 'Market Ceiling' in the lower of cost or market method.

Front 16

There are two types of inventory systems used to count inventory:

Back 16

1. Periodic

2. Perpetual

- Hybrid Inventory systems:

1. Units of inventory on hand - quantities only

2. Perpetual with periodic at YE

Front 17

Periodic Inventory System

Back 17

The quantity of inventory is determined only by physical count.

The actual COGS for the period is determined after each physical inventory by 'squeezing' the difference between beg. inv. plus purch. less end. inv. based on the physical count.

Front 18

Perpetual Inventory System

Back 18

Inventory record for each item of inventory is updated for each purchase and each sale as they occur.

The actual COGS is determined and recorded with each sale.

Front 19

Under US GAAP, during periods of inflation, a perpetual inventory system would result in the same dollar amoutn of ending inv. as periodic inv. system under which of the following inv. valuation methods:

Back 19

FIFO - Yes

LIFO - No

Front 20

Inventory turnover ratio

Back 20

COGS / average inv.

Front 21

Valuation of Fixed assets under IFRS

Back 21

Fixed assets are intially recognized at the cost to acquire the asset. Subsequent to acquisition, fixed assets can be valued using the cost model or the revaluation model.

Front 22

IFRS - Revaluation Model

Back 22

- A class of fixed assets is revalued to FV and then reported at FV less subsequen accum. Depr. and impairment.

- When FV differs materially from carrying value, a further revaluation is required.

Front 23

A method of estimating uncollectible accounts that emphasizes asset valuation rather than income statement measurement is the allowance method based on:

Back 23

Aging the receivables

Estimating bad debts on the aging analysis of accounts receivable balances focuses on the BS and emphasizes the valuation of assets. It results in a good matching of revenue and expense

Front 24

Estimates of price-level changes for specific inventories are required for which inventory method

Back 24

Dollar-value LIFO

Front 25

Dollar-Value Lifo Method

Back 25

Adjusts inventory retail prices and ending inventory costs for price-level changes

Front 26

The US GAAP lower of cost or market rule for inventories may be applied to total inventory, to groups of similar items, or to each item. Which generally results in the lowest inventory amount?

Back 26

Separately to each item

Front 27

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Back 27

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