Risk Management Now Includes the Evaluation of

question 83

Multiple Choice

Risk management now includes the evaluation of

• A) worldwide risks such as global warming.
• B) worldwide issues such as poverty.
• C) European issues such as the value of the euro.
• D) political risks in South America.

Grasp how inventory transactions affect financial statements under different inventory systems (perpetual vs. periodic).

Apply cost flow assumptions (FIFO, LIFO, Average Cost) in determining inventory value and cost of goods sold.

Understand the application of the lower of cost or net realizable value (LCNRV) rule on ending inventory.

Grasp the concept of the LIFO reserve and its effects on converting LIFO to FIFO.

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Definitions:

Principal

The initial amount of money borrowed or invested, excluding any interest or dividends.

Interest-Only Loan

A loan where the borrower pays only the interest on the principal balance for a set term while the principal amount remains unchanged.

Entire Principal

Entire Principal refers to the total amount of a loan or debt that is owed or borrowed, excluding any interest or additional fees.

Future

Financial contracts obligating the buyer to purchase an asset or the seller to sell an asset at a predetermined future date and price.