entory refers to the goods that a merchandising business has purchased with the main intention of reselling them. True False

Q: A major advantage of the retail inventory method is that it hides costs from competitors and…

A: Inventory is the current asset (goods or stock) which is held for the business for sale purpose.…

Q: Which account balance is NOT used to compute the cost of goods sold? a.Merchandise Inventory…

A: Formula: Cost of goods sold = Beginning Merchandise inventory + Net Purchases - Ending Merchandise…

Q: Indicate whether the following statements are true or false. 1. A merchandising company reports…

A: 1) This statement is True. As Service Based Companies do not sell the products so there Income…

Q: Which one of the following statements is true regarding the cost of sales, if the perpetual…

A: The perpetual inventory system is the company where the company counts and records the inventory on…

Q: A business using the perpetual inventory system, with its detailed subsidiary records, does not need…

A: The company can maintain its records of inventory on basis of two different systems: 1. Perpetual…

Q: Which of the following methods of inventory control will be used in case of a business whose…

A: Inventory control is a process of managing stock at the warehouse. It involves the optimization of…

Q: What is the treatment of the following items in connection with the retail inventory method? a.…

A: Since you have posted a question with multiple sub-parts, we will solve first three sub-parts for…

Q: The two basic approaches to accounting for inventory and thecost of goods sold are the perpetual…

A: Introduction: Perpetual inventory system: Under this system of inventory maintenance, the…

Q: True or False Merchandise inventory consists of products that a company acquires to resell to…

A: Merchandise inventory refers to inventory held by the company.

Q: Which of the following procedure is designed to prevent the company from ordering unnecessary items?…

A: D) Approval of purchase requisitions is the procedure designed to prevent the company from ordering…

Q: Cost of goods sold is the primary difference between a merchandising and a service business income…

A: Cost of goods sold refers to the cost incurred by the company for producing the goods which has been…

Q: It is used to show who is responsible for paying for shipping and when the title of the goods passes…

A: Payment term used to show who is responsible for paying for shipping and when the title of the goods…

Q: Whether or not an item has been physically delivered to the buyer is the main criteria to determine…

A: Revenue recognition is one of the important accounting principle that is being used in business.…

Q: Consignments refer to that specialized marketing method whereby the Consignee a. holds title to the…

A: Solution: In the consignments model, consignor will remain owner of goods and consignee takes…

Q: Discuss the treatment of freight-in, purchase returns, purchase discounts, normal spoilage, sales…

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

Q: What is a consigned inventory? Goods that are shipped and title transfer to the consignee. Goods…

A: Consigned inventory refers to items that are held and sold on behalf of another company. Consigned…

Q: The specific identification inventory method should be used when the inventory consists of…

A: Specific identification inventory method: It is a method used to value the inventory. It calculates…

Q: Finished goods is inventory stocked to be ready for sales to customers, Select one: True False

A: Inventory is classified as: Raw material  work in process Finished goods

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: What is the treatment of the following items in connection with the retail inventory method? g.…

A: Retail inventory method : The retail inventory method is the accounting method for estimation of the…

Q: Which of the following accounts is not included in inventory? a. Raw material b. Team c. Finished…

A: "Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: When a retailer sells merchandise to a customer on credit which one of the following accounts is…

A: Selling merchandise to the customer would include two journal entries, one is for selling goods, and…

Q: Under the perpetual inventory system, the business does not maintain records that show the running…

A: Solution: Under perpetual inventory system, inventory record is updated with every purchase and sale…

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

A: Accounting for inventory Inventory is all type of goods and products held by the seller to sell in…

Q: Requirement a. What are the accounting requirements for a correct sales​ cutoff?     A. A shipment…

A: Revenue shall be recognition according to accounting standards. Following is the condition to…

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: wo accounts that appear on the financial statements of a merchandising company but are not needed by…

A: Cost of goods sold is the expense which are directly related to the goods. Purchase of inventory,…

Q: Which of the following accounts is used in merchandising but not in service type of business?…

A: Service company deals with the intangible product whereas merchandise company buys tangible product…

Q: What account balance is not used to computer the cost of good sold? a. Sales  b. Purchased c.…

A: Calculate the cost of goods sold as follows: Cost of goods sold = Opening inventory + Purchases -…

Q: If a customer purchases merchandise on credit and return the defective merchandise before payment,…

A: Perpetual inventory system: The perpetual inventory system records and updates the inventory after…

Q: When a store purchases merchandise, why are individual departments not allowed to directly deal with…

A: Internal control helps an organization to safeguard its objectives. It helps to reduce risk and…

Q: When the merchandise inventory account provides a running balance of the goods on hand, which…

A: The question is related to Inventory system. There are two methods of Inventory.Perpetual inventory…

Q: Which of the following is not a reason for the physical inventory count to differ from what…

A: Inventory is one of the important current asset of the business. This can be in form of raw…

Q: Which of the following statement is FALSE for Merchandise inventory of the Business? a. It is a…

A: Merchandise inventory is classified as a current asset on the balance sheet. Assets normally have a…

Q: In a retail business that uses a perpetual inventory system, scanning a bar code does not: O…

A: In a retail business that uses a perpetual inventory system, scanning a bar code does not: Option…

Q: Cost of goods sold is a major expense of a service business

A: Cost of goods sold refers to the sum of direct costs incurred by the company for producing the…

Q: The factor that determines whether goods should be included in a physical count of inventory is…

A: Physical count helps in tracking the inventory and efficiency of management control.

Q: Which of the following accounts would not appear on a worksheet for a merchandising entity that uses…

A: Periodic inventory system is a system of recording inventory in a way the closing stock is found out…

Q: Provide the name of a business and example inventory for that business. List one or more examples of…

A: Introduction For every business, inventory or stock plays a key role. Stock may be in the form of…

Q: The Purchases account is closed to the Merchandise Inventory account. True False

A: Under the periodic inventory method, the purchases or sales are used instead of merchandise…

Q: When merchandise is bought for​ resale, which of the following accounts would be​ increased?   A.…

A: Merchandise: It can be defined as any type of manufactured goods which may include commercial or…

Q: Consignment goods are: Multiple Choice Goods shipped by the owner to the consignee who sells the…

A: Solution:- Introduction:- Consignment goods means:-

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

Inventory Valuation

Before discussing the topic inventory valuation let’s discuss the meaning of inventory. In accounting, inventory is also known as stock. Inventory means all the finished goods, materials, merchandise that a business holds for the purpose of selling it in the market with the motive of earning profit.