In a Two-Sector (Manufacturing and Agriculture) Specific-Factors Model

question 138

Multiple Choice

In a two-sector (manufacturing and agriculture) specific-factors model:

• A) land is specific to the manufacturing sector.
• B) labor is specific to the manufacturing sector.
• C) capital is specific to the manufacturing sector.
• D) labor and capital are specific to the manufacturing sector.

Understand the lower of cost and net realizable value (LCNRV) rule and its application.

Differentiate between goods on consignment and goods in transit and their impact on inventory.

Grasp the concept of the gross profit method for estimating ending inventory.

Comprehend the retail inventory method and its application.

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Definitions:

Cost Method

An accounting method used to value an investment, where the investment is recorded at its acquisition cost without reflecting changes in its market value.

Consolidated Income Statement

A financial statement that summarizes the financial performance of a company and its subsidiaries.

Gross Profit

The difference between sales revenue and the cost of goods sold, indicating the efficiency of core operations.

Cost Method

An accounting technique where investments are recorded at their original purchase cost, without adjustment for market changes unless deemed permanently impaired.