Which of the Following Statements Is True

question 6

Multiple Choice

Which of the following statements is true?

• A) The buyer of a forward contract is said to be long forward.
• B) The seller of a forward contract is said to be short forward.
• C) The seller of a forward contract is said to be long forward.
• D) The buyer of a forward contract is said to be short forward.
• E) Choices a and b

Determine the appropriate inventory valuation under various circumstances using the lower of cost or market rule, including consideration of market replacement costs and net realizable value.

Understand how to calculate ending inventory and cost of goods sold using FIFO and LIFO methods under a perpetual inventory system.

Identify the effects of inventory costing method selection (FIFO, LIFO, Weighted Average, Specific Identification) on financial statements, specifically gross profit and income.

Recognize the components and application of the gross profit method for estimating inventory.

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Definitions:

Cotton Gin

Invented by Eli Whitney in 1793, the machine that separated cotton seed from cotton fiber, speeding cotton processing and making profitable the cultivation of the more hardy, but difficult to clean, short-staple cotton; led directly to the dramatic nineteenth-century expansion of slavery in the South.

Eli Whitney

An American inventor best known for inventing the cotton gin, a device that revolutionized the cotton industry.

Boll Weevil

A beetle that feeds on cotton buds and flowers, historically significant for its devastating impact on the United States cotton industry.

Mid-Nineteenth Century

Refers to the period approximately from 1830 to 1870, a time marked by significant historical events including the American Civil War.