Cost Accounting (15th Edition)
15th Edition
ISBN: 9780133428704
Author: Charles T. Horngren, Srikant M. Datar, Madhav V. Rajan
Publisher: PEARSON
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Chapter 16, Problem 16.10Q
How might a company simplify its use of the NRV method when final selling prices can vary sizably in an
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Which of the following is not a disadvantage of the LIFO inventory cost flow assumption?
a. The impact of LIFO liquidation profits
b. It does not match the most recent costs with revenue
c. The possibility of income manipulation by management
d. It impairs comparability between companies using LIFO
Revenue recognition in the Xerox case called for determining the stand-alone selling price for each of the deliverables and using it to separate out the revenue amounts. Why do you think it is important to separate out the selling prices of each element of a bundled transaction? How do these considerations relate to what Xerox did to manage its earnings? Do you think the new revenue recognition standard will change the criteria in accounting for transactions like at Xerox?
How much is the adjustment to the Cost of Sales account to set up its correct balance?
Chapter 16 Solutions
Cost Accounting (15th Edition)
Ch. 16 - Give two examples of industries in which joint...Ch. 16 - What is a joint cost? What is a separable cost?Ch. 16 - Distinguish between a joint product and a...Ch. 16 - Why might the number of products in a joint-cost...Ch. 16 - Provide three reasons for allocating joint costs...Ch. 16 - Why does the sales value at splitoff method use...Ch. 16 - Prob. 16.7QCh. 16 - Distinguish between the sales value at splitoff...Ch. 16 - Give two limitations of the physical-measure...Ch. 16 - How might a company simplify its use of the NRV...
Ch. 16 - Why is the constant gross-margin percentage NRV...Ch. 16 - Managers must decide whether a product should be...Ch. 16 - Prob. 16.13QCh. 16 - Describe two major methods to account for...Ch. 16 - Why might managers seeking a monthly bonus based...Ch. 16 - Prob. 16.16ECh. 16 - Prob. 16.17ECh. 16 - Prob. 16.18ECh. 16 - Prob. 16.19ECh. 16 - Prob. 16.20ECh. 16 - Prob. 16.21ECh. 16 - Prob. 16.22ECh. 16 - Prob. 16.23ECh. 16 - Prob. 16.24ECh. 16 - Joint costs and decision making. Jack Bibby is a...Ch. 16 - Joint costs and byproducts. (W. Crum adapted)...Ch. 16 - Prob. 16.27PCh. 16 - Prob. 16.28PCh. 16 - Prob. 16.29PCh. 16 - Prob. 16.30PCh. 16 - Prob. 16.31PCh. 16 - Prob. 16.32PCh. 16 - Prob. 16.33PCh. 16 - Prob. 16.34PCh. 16 - Prob. 16.35PCh. 16 - Prob. 16.36PCh. 16 - Methods of joint-cost allocation, comprehensive....
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- If the standalone selling price of a good or service is not readily observable, what approaches might a company use to obtain an estimate of the stand-alone selling price?arrow_forwardA high inventory turnover ratio provides evidence that a company is having problems with stockouts and disgruntled customers. Do you agree? Explain.arrow_forwardHow can a company track the extent of price discounting on a customer-by-customer basis?arrow_forward
- During a period of rising inventory costs and stable output prices, describe how net income and total assets would differ depending upon whether LIFO or FIFO is applied. Explain how your answer would change if the company is experiencing declining inventory costs and stable output prices.arrow_forwardWhat is a sensible credit period? Should the credit period for your company's sales vary depending on the industry in which you are operating?arrow_forwardFor each situation, list the assumption, principle, or constraint that has been violated, if any. List only one answer for each situation. a. East Lake Company recognizes revenue at the end of the production cycle but before sale. The price of the product, as well as the amount that can be sold, is not certain. choose one of the assumption, principle or constraint Going concern assumptionPeriodicity assumptionNo violationHistorical cost principleRevenue recognition principleEconomic entity assumption b. Hilo Company is in its fifth year of operation and has yet to issue financial statements. (Do not use the full disclosure principle.) choose one of the assumption, principle or constraint Historical cost principleGoing concern assumptionRevenue recognition principleNo violationPeriodicity assumptionEconomic entity assumption c. Gomez, Inc. is…arrow_forward
- Which of the following in NOT a potential benefit of granting trade credit? May allow quicker movement of inventory. O Enhances competitiveness for the firm granting credit. A delay in receiving payment from customers. May assist in generating additional sales.arrow_forwardWhich of the following statements is correct?a. Sales returns and allowances increase a company’s profit.b. If a customer returns a product, sales revenue will be credited.c. The performance obligation in a sale of products is generally satisfied when thecustomer orders the products.d. A company must accrue for estimated future returns at the end of the period in whichthe related sales revenue is recognized.arrow_forwardThe margin of safety can be defined as the amount by which sales can decrease beforelosses are incurred by the company.TRUEFALSEarrow_forward
- Fluctuations in unit volume, changes in unit price or unit cost of goods sold and modifications in the sales mix of a firm's offerings are all causes for a decrease in which of the following Net Sales Gross Margin Trade Margin Gross Sales Net Marginarrow_forwardwhich of the following ratios would a supplier most likely monitor to assess the ability of a company to pay for its purchases in a timely manner? PE ratio price-to-sales ratio current ratio return on equity times interest earned ratioarrow_forwardWhen sales are made with a right of return, the company_ а. should recognize revenue for the full sales price b. should not recognize any revenue С. record the estimated returns in the Sales Returns account O d. records the returned asset in a separate inventory accountarrow_forward
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