devry acct304 week 7 discussions
Question # 00024263
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Updated on: 08/26/2014 08:55 PM Due on: 09/21/2014
The lower-of-cost-or-market (LCM) approach was developed to avoid reporting inventory at an amount greater than the benefits it can provide. The LCM approach records losses in the period the value of the inventory drops below its cost instead of later in the period that the goods are ultimately sold. Is this a conservative or an aggressive approach? What does GAAP say about LCM?
Q2
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Inventory Errors (graded) |
It is discovered in 2013 that ending inventory from 2011 is understated. What accounts will be affected by this understatement, and how will they be affected? This is a situation that really happens. Start with the 2011 inventory being understated, and track the changes through the inventory account to 2013.
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Solution: devry acct304 week 7 discussions