Net Realizable Value Refers to

question 229

Multiple Choice

Net realizable value refers to

• A) the net amount the company expects to realize from the sale.
• B) the selling price.
• C) the cost to replace the item.
• D) the gross profit realized from the sale.

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Definitions:

First-In, First-Out Method

An inventory valuation method where the first items purchased or produced are the first ones sold, affecting the cost of goods sold and ending inventory value.

Equivalent Units

A concept used in process costing that converts partially completed units into a smaller number of fully equivalent completed units.

Conversion Costs

represent the total expenses incurred to convert raw materials into finished products, which typically include labor and overhead costs.

Process Costing

An accounting methodology applied when identical units are mass produced, assigning average costs to each unit, simplifying the costing process.