The Ceiling, or the Maximum Market Amount at Which Inventory

question 9

Multiple Choice

The ceiling, or the maximum market amount at which inventory can be carried on the books, is equal to

• A) Current replacement cost
• B) Net realizable value
• C) Historical cost
• D) Selling price

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Definitions:

Reves v. Ernst & Young

A significant court case that established a test for determining whether a transaction qualifies as a security under the securities laws.

Promissory Notes

Written promises to pay a specified sum of money to a certain entity or person at a specified time or on demand.

Howey Test

A test derived from SEC v. W.J. Howey Co. to determine if a transaction qualifies as an "investment contract" and thus is considered a security subject to certain regulatory requirements.

Investment Contracts

Agreements or schemes whereby an individual invests money with the expectation of profit primarily from the efforts of others.