Study Guide for Chapter 7

The tracking of inventory shrinkage due to theft, damage, or errors is completed with the help of a (n) inventory. OA. physical count B. authorization C. sale OD. delivery BI of

6. What is the major advantage of using a perpetual inventory system? a. It minimizes error in posting receipts and issues of materials. b. It avoids inventory shortages and overages. c. It provides efficient internal control over materials. d. It avoids losses due to theft.   7. Scrap materials consists of: a. Raw materials remaining from the production cycle but usable for purposes other than the original purpose. b. Defective units that may be used or sold. c. Finished goods that do not meet quality control standards and cannot be reworked. d. Raw materials remaining from the production cycle but not usable for any purpose.   8. The sale of scrap from a manufacturing process is recorded as a(n): a. Increased in finished goods control b. Decrease in manufacturing overhead control. c. Decrease in finished goods control d. Increase in manufacturing overhead control   9. In a job-order…

Which type of inventory might a service provider report? Select one: O O O O a. raw materials b. work-in-process c. finished goods d. two or more of a, b, and c. e. a service provider never reports inventory Check

Which function or department below records the decrease in inventory due to a sale? a. warehouse b. sales department c. billing department d. inventory control

Inquiries of warehouse personnel concerning possible obsolete inventory items provide assurance about management's assertion of: 1. Completeness 2. Rights and Obligations. 3. Presentation 4. Valuation O 1 O 2 O 3

What is the major advantage of using a perpetual inventory system? a.) It provides efficient internal control over materials. b.) It avoids inventory shortages and overages. c.) It minimizes error in posting receipts and issues of materials. d.) It avoids losses due to theft.

In the Purchasing Process - Level 0 Diagram, a data flow called "inventory's purchase requisition" most likely would be sent by the inventory management process to which of the following processes? Group of answer choices a. order goods and services b. receive goods and services c. determine requirements d. none of the above.

How does the procedure for determining inventory requirements differ between a basic batch-processing system and batch processing with real-time data input of sales and receipts of inventory? What about for the procedures the receiving department uses?

1) Is the accounting cycle in a merchandising operations different from a service operations? Justify.   2) Identify 3 distinctions between periodic inventory system and perpetual inventory system.

Describe the procedures, documents, and departments involved when insufficient inventory is available to fill a customer’s approved order.

Sales orders are written by sales people who have no access to the goods, which are released by warehouse personnel. This is example of: an analytical review establishing a system for storing and counting inventory proper documentation that is monitored properly segregation of duties

Perpetual inventory valuation system does not require....   a. physical count or measurement of inventory   b. suspension of receipts and issue in the entire factory   c. maintenance of inventory records   d. suspension of receipts and issue in the entire factory, maintenance of inventory records and physical count or measurement of inventory.

Which of the following is not generally an internal control activity? a.Physically counting inventory in a perpetual inventory system b.Establishing clear lines of authority to carry out specific tasks c.Reducing the cost of hiring seasonal employees d.Limiting access to computerized accounting records

9. An inventory accounting policy that should be disclosed in a summary of significant accounting policies is a. Composition of inventory into raw materials, work in process and finished goods b. Major backlog of inventory orders c. Method used for pricing inventory d. All of these should be disclosed in the summary of significant accounting policies.

What is the difference between a pull system and a push system of inventory control?

5. Inventory structures for inventory receipt process Refer to figure 2-30 in the text and the discussion about updating master files from transaction files. The discussion pertains to the record structures for a sales transaction. Prepare a diagram (similar to figure 2-30) that presents the record structure for the receipt of inventory items that had been ordered previously. Assume that a purchase order file exists and will be updated through information collected via a receiving report, ehich is the transaction record. Further, assume that a purchase was made on account, and the vendor AP record needs to be updated. Do not show the general ledger records in your diagram. Explain each step in the update process.