A company experiences inventory shrinkage and records the proper entry to account for it. As a result of this entry: Select one: a. gross profit will decrease and net income will decrease b. gross profit will increase and net income will increase c. gross profit will increase and net income will decrease d. gross profit will decrease and net income will increase

Q: If ending inventory is understaffed for year 1, then in year 2…. A. Costa of goods sold and gross…

A: Inventory is the term used in accounting which refers to the goods as well as materials that the…

Q: der the periodic inventory system, all increases and decreases in inventory, such as purchases,…

A: Solution: False.  Under periodic inventory system Daily inventory records are not maintained.

Q: The net realizable value of Lake Corporation’s inventory has declined below its cost. Allyn Conan,…

A:

Q: What is the effect on net income if a company failed ro record a purchase in transit (FOB shipping…

A: Purchase in transit (FOB shipping point) means that where buyer become the owner of the goods at the…

Q: (True or False) Cost of sales, under the periodic system, is calculated as inventory at start (plus…

A: Periodic Inventory System - Under periodic inventory system cost of goods sold will be calculated at…

Q: In what ways would a reduction in inventory help the company

A: Inventory refers to all the items, goods, merchandise, and materials held by a business for selling…

Q: Jamison Corporation’s inventory cost in its balance sheet is lower using the first-in, first-out…

A: Option b. down is the answer.

Q: If the ending inventory of a firm is overstated by $49,000, by how much and in what direction…

A: Computation of Income: Gross Profit = Sales – COGS COGS = Opening Inventory + Purchases – Closing…

Q: Compared to using the FIFO method to account for inventory, during periods of risingprices, a…

A: USING OF LIFO METHOD

Q: How does a company that uses a perpetual inventory system determine the amount of inventory…

A:

Q: An increasing inventory turnover ratio indicates that: a.a company has reduced the time it takes to…

A: The inventory turnover ratio indicates the efficiency of a business to purchase and selling its…

Q: How can an accounting change cause a company to increase a previously reported inventory amount?

A:

Q: gross profit method assumes

A: The gross profit technique calculates the value of inventory by combining current period data on net…

Q: Which of the following is not a characteristic of a perpetual inventory system? O Cost of goods sold…

A: Here in this question we are required to answer which of the characteristics is not of perpetual…

Q: T, F. Under the GAAP rule, inventories can be reported at above cost in the balance sheet. T, F. If…

A: Under GAAP rules , inventory is valued at cost or net realizable value which ever is lower due to…

Q: nsidered when not only counting inventory, but likewise in the final valuation of inventory?  Why is…

A: Inventory is the goods lying in the stock of the entity which is either purchased or produced, ready…

Q: If purchases were recorded correctly but ending physical inventory is understated, which one of the…

A: Working capital, conjointly referred to as web assets (NWC), is that the distinction between a…

Q: Under the perpetual inventory system, cost of goods sold is debited when inventory is sold and…

A: Solution: Under perpetual inventory system, inventory is updated with every purchase and sales. Cost…

Q: When a periodic inventory system is used, a.only revenue is recorded each time a sale is made.…

A: Under perpetual inventory, both the sales entry and cost of goods sold entry are recorded each time…

Q: When preparing interim financial statements, what two methods can companies utilize to estimate cost…

A:

Q: Requirements a. At what amount was Cost of Goods Sold reported in the company's year-end income…

A: A perpetual inventory system is an inventory recording method in which the inventory transaction is…

Q: Suppose Ajax Corporation overstates its ending inventory amount. What effect will this have on the…

A: Given information is: Ajax Corporation overstates its ending inventory amount.

Q: Which term is applied to the excess of revenue from sales over the cost of merchandise sold? a.net…

A: Income statement: It refers to a financial statement that presents all the income earned by the…

Q: 4. Using the FIFO method, the most recent purchases of inventory are assumed to be contained: a. on…

A: Under FIFO method, units purchased earlier are assumed to be sold first and the ending inventory…

Q: Importance of Inventory Valuation What needs to be considered when not only counting inventory, but…

A: SOLUTION- INVENTORY IS GOODS LYING IN THE STOCK OF THE ENTITY WHICH IS EITHER PURCHASED OR…

Q: the ending inventory of a firm is overstated by $49,000, by how much and in what direction…

A: Solution Concept Mathematically Cost of goods sold       =beginning inventory + purchase – ending…

Q: If a company understates its inventory, what are the effects on cost of goods sold and net income…

A: The cost of goods sold is calculated as difference between cost of goods available for sale and…

Q: The gross profit technique implies that A. The value of the inventory has not grown from prior…

A: The amount of ending inventory for a reporting period is estimated using the gross profit technique.…

Q: When there are no inventory at the beginning or at the end of the period, the total purchases will…

A: Cost of sales means actual cost of goods that is being sold to the customers. It includes beginning…

Q: Sigma Corporation experiences a decrease in sales and cost of goods sold, an increase in accounts…

A: Accounting's goals include keeping a systematic record of all financial transactions in a book of…

Q: Which cost flow assumption generally results in the highest reported amount for ending inventory…

A: First-in-First-Out method: In First-in-First-Out method, the costs of the initially purchased items…

Q: When determining gross profit, only the following items must be taken into consideration:    A.…

A: Gross Profit is the revenue earned by the company after subtracting the cost associated with earning…

Q: 1. If the inventory account at the end of the year is understated, the effect will be to…

A: SOLUTION- IF ENDING INVENTORY IS UNDERSTATED , THE COST OF GOOD SOLD FOR THAT YEAR (2018) WILL BE…

Q: A business uses a perpetual inventory system. During periods of rising prices, cost of goods sold…

A: In FIFO the earliest  goods ( beginning) will be sold first.

Q: Merchandise inventory at the end of the year is overstated. Which of the following statements…

A: Merchandise inventory at the end of the year is the closing stock which is reported in the balance…

Q: If the ending inventory of a firm is overstated by $56,000, by how much and in what direction…

A: The answer is as fallows

Q: Using a perpetual inventory system, the return to their supplier of merchandise purchased on account…

A: When merchandise purchased on credit Inventory accout is debited and accounts payable is credited.…

Q: During a period of rising prices, which U.S. GAAP inventory method reports the most current…

A: Definition:

Q: Allowance Method in accounting for inventory write-down

A: Statement I is correct because Allowance method is required to be followed in accounting for…

Q: If ending inventory is overstated in the current fiscal year, what effect will this have on net…

A: The question is multiple choice question and related with overstated ending inventory. The ending…

Q: If ending inventory in Period 1 is​ overstated, gross profit in Period 2​ is

A: The correct answer is Understated.

Q: A retail business like Best Buy experiences some loss of inventory due to shoplifting, employee…

A: The inventory difference may occur due to theft, shrinkage, fire, process loss, etc

Q: Which of the following statements is true for a company that uses a periodic inventory system?…

A: Only inventory account is used for all the inventory transactions in the perpetual inventory system.…