The effects of purchasing inventory on credit are to:a. increase assets and increase liabilities.b. increase assets and increase stock-holders’ equity.c. decrease assets and decrease stock-holders’ equity.d. decrease assets and decrease liabilities.

Q: Estimate ending inventory and cost of goods sold using the gross profit method.

A: Under gross profit method, calculation of cost of goods sold: Cost of goods sold = Sales* ( 1 -…

Q: Changing the method of inventory valuation should be reported in the financial statements under what…

A: Inventory- A manufacturing company's inventory is a critical current asset. Inventory refers to the…

Q: If a company purchases inventory on account, what type of accounts are affected? (i.e., assets.…

A: Inventory :- It is raw materials , work in progress , finished goods, which is used to produce…

Q: True or False Merchandise inventory is reported in the long-term assets section of the statement of…

A: Long-term assets:                            Long-term assets are those assets called noncurrent…

Q: Under the perpetual inventory system, increases and decreases in inventory are recorded through the…

A: Solution: Under perpetual inventory system, inventory records are updated with every purchase and…

Q: Merchandise inventory is classified on the balance sheet as a a. current liability b. current…

A: Assets can be classified as current asset and long-term assets. Liabilities can be classified as…

Q: What is the effect of an entry to record the purchase of inventory on account under the perpetual…

A: Under the perpetual inventory system, purchases are directly debited to the "Inventory account". And…

Q: According to the expense recognition principle, inventory costs are expensed as cost of goods sold…

A: True

Q: How is the allowance for the inventory write-down shown in the statement of financial position? a.…

A: Inventory means the stock of goods in hand . Goods means is the thing in which the business deals…

Q: Although merchandising transactions affect the balance sheet in reporting inventory, they primarily…

A: Solution: Merchandising transactions involves purchase and sales of goods. these transactions…

Q: If Inventory is purchased on credit, then there are: Select one: a. an increase in Assets and an…

A: Current assets: Current assets are all those assets which are expected to be sold or used as a…

Q: is a measure of inventory profitability that relates a gross margin to the cost of the inventory.

A: Inventory profitability means profits related to inventory cost which are calculated using these two…

Q: Under periodic inventory system, when there is purchase return then: Inventory will be debited…

A: Answer  A periodic inventory system only updates the closing inventory balance in the general ledger…

Q: FAST PLZ - Which of the following element of cost is important in calculating the cost of closing…

A: Cost of goods sold means the cost incurred on the manufacturing or purchase of goods which has been…

Q: For valuation of inventory, the lower of cost or market rule may be applied to a. the total…

A: Inventory of the business should be valued by choosing appropriate method. Lower of cost of market…

Q: Which of the following is not an element of the financial statements? Group of answer choices…

A: Assets: Property or things owned by business called Assets. Types of Assets: Tangible and intangible…

Q: What type of account is Merchandise Inventory and on which financial statement is it found? Does it…

A: Merchandise inventory means goods or stock that the business has in its books or in its stock. This…

Q: Describe the entry to adjust from cost to net realizable value for inventory write-downs. What…

A: Journal entry: Journal entry is a set of economic events which can be measured in monetary terms.…

Q: Which of the following is not an element of the financial statements?A. future potential sales price…

A: Financial statements seem to be reports generated by a corporation's management to demonstrate the…

Q: The gross profit method and retail inventory method C Are both estimates of ending inventory and…

A: In company, there is a requirement of valuation of the inventory to find out the cost of the goods…

Q: What effects on a retail store's accounting equation occur when it records merchandise purchased for…

A: Option (d) [ No net effect. ]  for explanation refer step 2

Q: Which of the following is correct for net purchases ? Select one: O a. Opening inventory + purchases…

A: Purchases refer to the business activity of procurement goods (either finished or raw materials) or…

Q: Income Summary is closed to what account Income accounts O Expense Accounts Owner's equity account O…

A: all the incomes and expenses are closed by transferring the accounts to the income statement. The…

Q: 1. Calculate the value of closing inventory using the Weighted average cost inventory valuation…

A: As per weighted average cost inventory valuation method, cost per unit is calculated by dividing the…

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: Explain how the inventory valuation method (LIFO or FIFO) chosen by a company affects the cost of…

A: Inventory management refers to the valuation of inventory in three ways FIFO, LIFO and weighted…

Q: What is Return on Assets? How do you calculate Inventory Turnover and The Number of Days' Sales in…

A: P

Q: Explain briefly the application of the LCM rule to ending inventory. Describe its effect on the…

A:

Q: Which one the following types of cost is most likely to be included in determining the cost of…

A: Freight in cost is concerned with the inventory value and should be included in determining the cost…

Q: What is the measurement value of inventory? Select one: a. Expected Value b. Fair Value c.…

A: Inventory are the goods which the businesses held for the sale.

Q: The journal entry to write inventory up to the net realizable value would be​ _______. a) a debit to…

A: SOLUTION- INVENTORY IS AN ASSET AND TO WRITE UP INVENTORY WE HAVE TO CREDIT THE INVENTORY. AS IT…

Q: Inventory is classified as : Select one: a. a current asset on the balance sheet b. either an…

A: Inventory can be defined as the goods or items which are stored by the business either for selling…

Q: When inventory is sold on account, which of the following is true? Operating cash flows are…

A: When inventory has been sold out , the inventory would be decrease with cost price , account…

Q: The retail inventory method requires a company to value its inventory on the balance sheet at retail…

A: The retail inventory method is an accounting process wherein the estimated or approximate value of…

Q: i) Explain the main causes of inventory decreasing and increasing. (ii) What is the accounting…

A: Hello. Since your question has multiple parts, we will solve the first question for you. If you want…

Q: The effects of purchasing inventory on credit are to

A: Every transaction has two effect in books of accounts as per dual concept. All entries should have…

Q: Purchasing inventory on credit will result in the following changes to the business accounts:…

A: The question is related to Basic Accounting Equation. Accounting equation is as under:  Assets =…

Q: Which of the following regarding the lower of cost ormarket rule for inventory are true?(i) The…

A: Option c is correct.

Q: How would the following transactions affect the current ratio and the acid-test ratio? (a) Purchase…

A: Current ratio is the ratio between the current assets and current liabilities. It shows the…

Q: how do I find the amount of inventory under the dollar value using the LIFO method?

A: Dollar value LIFO Method: Dollar value LIFO is a method which is basically used for inventory that…

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.