Both the gross profit method and the retail inventory method provide a way to estimate ending inventory. What is the main difference between the two estimation techniques?

Q: complete the following table which compares the effects of LIFO,  FIFO and weighted-average…

A: Inventory valuation in costing is done using mainly three methods namely FIFO, LIFO and weighted…

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: Which of the three methods of inventory costing -FIFO, LIFO, or weighted average cost - will in…

A: FIFO - Inventory purchased first is assumed to be sold first. LIFO - Inventory recently purchased is…

Q: When using the periodic FIFO inventory cost method, which of the following statements is true? a.The…

A: Under FIFO method the oldest products in stock is used to assess the cost of products sold. To put…

Q: 3. Indicate the effect of the following errors on gross profit and cost of goods sold (COGS), i.e.,…

A: Solution Concepts Purchase account is an expense and if it is understated profit will increase and…

Q: Which of the following statement about the inventory write-down is not correct? * If the cost is…

A: As per International Accounting Standards IAS 2- “ Inventory includes assets that are held for the…

Q: In a periodic inventory system, the quantity of ending inventory is determined by: a. Looking at the…

A: Under the periodic inventory method total ending inventory can be calculated by physical count.

Q: Which inventory method provides a better matching ofcurrent costs with sales revenue on the income…

A: Inventory valuation is a method of finding the actual cost of the goods left unsold at the end of a…

Q: The Rider Company uses the gross profit method to estimate ending inventory and cost of goods sold.…

A: In order to accurately estimate the ending inventory under the gross profit method, the cost…

Q: 1.What are the three primary inventory cost flow assumptions? 2. How is cost of goods sold…

A: Since you have posted multiple questions, we will do the first one for you. To get the other…

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: In a cost-divided income statement, changes in purchased goods (merchandise) must be reported under…

A: Following is the answer to the given question

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: What is the method of accounting of inventory in which the cost of goods is recorded each time a…

A: The cost of goods included the cost of goods that are sold during the period.

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: 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: Do you agree with the following statements? Express your opinion on each statement.

A: 1: This statement is correct  This can be explained with the help of example: Suppose closing stock…

Q: Do you agree with the following statements? Express your opinion on each statement. An inventory…

A: 1) This statement is correct  This can be explain with the help of example: Suppose closing stock is…

Q: Which of the following is incorrect about the perpetual inventory method? a. purchases are…

A: Perpetual inventory method : Perpetual inventory method records real time transactions of inventory…

Q: What are the reasons for making an estimate of the value of ending inventory?

A: Inventory- It is the amount of those units which is not sold yet by the entity or the units which…

Q: During a period of falling prices, which of the following inventory methods generally results in the…

A: There are 3 types of methods for inventory valuation: a.FIFO b. LIFO c. Weighted average FIFO: In…

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: Under periodic inventory system, at the time of sale of inventory the journal entry for cost of…

A: Periodic Inventory System Basically there are two types of inventory system are there.  One is…

Q: What is the effect on the cost of goods sold, gross profit, and net income if ending merchandise…

A: Ending inventory is the value of inventory available on hand at the end of the accounting period.

Q: What are the reasons for making an estimate of the value of ending inventory?

A: Ending inventory is the value of goods available in the stock at the end of the period

Q: Explain what is meant by the cost rule or net realizable value, whichever is less, and how it is…

A: As per IAS -02 inventory should be measured on cost or Net realizable value whichever is lower.…

Q: What is the correct entry to write off the inventory under perpetual method? Dr. Cost of Goods sold…

A: The Perpetual Inventory System is a highly preferred system as it can produce accurate results…

Q: Which of the following statements about FIFO is true? Select one: a. All of the statements are…

A: FIFO is the First-in and First-out method of valuation of Inventory. Under this method, it is…

Q: In Perpetual inventory system the loss of goods is included in a. Sales b. Closing stock c.…

A: The perpetual inventory system is a type of inventory valuation in which the inventory sold and…

Q: inventory is added to Total Goods Available for Sale when computing for Cost of Goods Sold. True F

A: Solution: False. The statement that Ending inventory is added to Total Goods Available for Sale when…

Q: Explain how the retail inventory method can be made to approximate the lower of cost or market rule.

A: Retail inventory method:   It takes into account. all the retail amounts that is, the current…

Q: Under the perpetual inventory method, what account is credited when adjusting for the estimated cost…

A: Perpetual inventory system is the system of maintaining the inventory records perpetually throughout…

Q: When using the periodic LIFO inventory cost method, which of the following statements is true? a.The…

A: As per the LIFO method, goods purchased last or most recent purchases would be sold first.   Which…

Q: The journal entry to record a write-down of inventory from cost to its lower market value includes…

A: Inventory is very important current asset for the business. As per accounting standards, inventory…

Q: The primary objective of inventory accounting is to a. Determine the peso amount at which inventory…

A: The accounting for inventory is something which is done with regard to maintenance or reporting of…

Q: Which of the following is not a step in the retail inventory method process? a.Compute the cost of…

A: The question is based on the concept of Cost Accounting.

Q: answer the following regarding inventories.   The inventory costing method which in a period of…

A: The correct Answer is Last-in, First-out (LIFO) Method

Q: 3. Indicate the effect of the following errors on gross profit and cost of goods sold (COGS), i.e.,…

A: Cost of goods sold (COGS)- The cost incurred on the goods sold during the period is referred to as…