When merchandisers and manufacturers prepare income statements for their annual reports to shareholders, they usually begin the statement with net sales. For internal reporting purposes, however, the income state-ments will show gross sales and the related contra-revenue accounts of sales returns and allowances and sales discounts. What might explain this difference in the financial information disclosed to external parties and management? Do you consider the more limited disclosure

Q: What is the difference between the auditor’s approach in verifyingsales returns and allowances and…

A: Sales returns and allowances: Sometimes, customers either return goods due to manufacturing defects,…

Q: Analyze the truth of this statement. The income statements for merchandising and manufacturing…

A: Cost of goods manufactured - The cost of goods manufactured is calculated as follows - Total…

Q: The following table shows some selected financial information of Quartz Company. According to the…

A: Inventory Turnover: = COGS / (Average inventory) Where; COGS = Cost of goods sold Average inventory:…

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: Bias in revenue recognition would least likely be suspected if:A . the fi rm engages in barter…

A: The revenue recognition concept means that one should  write down revenue only when it has been…

Q: Which of the following is least likely to be a procedure included in an accountant’s review of…

A: Interim financial information refers to the financial information of an entity or the statements of…

Q: All sales and purchases for the year at Ross Corporation are credit transactions. Ross uses a…

A:

Q: In the percentage of sales basis, companies examine their receivables by preparing an aging…

A: Uncollectible account is the estimated amount of account receivable is going to be bad debts. Such…

Q: Which of the following needs an adjustment to the accounts receivable account of ABC Company? a.…

A: Accounts receivable are created by an organisation when it records sales on credit. The accounts…

Q: PART 1: Identify the assertions for each of the following substantive procedures: (a) Review the…

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

Q: When auditing merchandise inventory at year-end, the auditor performs audit procedures to obtain…

A: Goods received on consignment shall not be included in the inventory of consignee.

Q: The Cloud Company employs a perpetual inventory system and the McKenzie Corporation uses a…

A: Definition:   Perpetual and periodic inventory system: In merchandise business, there are two types…

Q: Presented below is a list of items that may or may not be reported as inventory in a company's…

A: Financial statements: Financial statements are condensed summary of transactions communicated in the…

Q: When preparing a worksheet for a merchandising company using periodic inventory system, which…

A: 1. The income statement contains all temporary accounts and the balance sheet contains all the…

Q: Revenue recognition in the Xerox case called for determining the stand-alone selling price for each…

A: Revenue recognition: The revenue recognition principle is an accounting principle that specifies the…

Q: Parsons Inc. has proposed a change from one inventory accounting method to another for financial…

A: Accounting changes: Accounting changes can be defined as changes in accounting principles,…

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: Generally accepted accounting principles should be applied consistently from period to period.…

A: Changes in inventory: Change in inventory method is said to be the difference between the previous…

Q: The following statements are correct except   a.Under the allowance method, estimated losses from…

A: Allowance method is the method for recording the estimation of uncollectible receivables. It kept…

Q: A company that uses the periodic inventory system makes the following errors:…

A: Periodic inventory system refers to a method of inventory valuation in which physical count of…

Q: When a company changes its inventory method to LIFO, an exception is made for the way accounting…

A: Explain the difference in the accounting treatment of a change to the LIFO inventory method from…

Q: Assume that you are the auditor of Weller, Inc and that you have been asked to explain the…

A: Full disclosure principle: Full disclosure principle ensures, all financial information relating to…

Q: When auditing merchandise inventory at year-end, the auditor performs audit proceduresto obtain…

A: Given information is: When auditing merchandise inventory at year-end, the auditor performs audit…

Q: A company regularly purchases materials from a manufacturer on credit. Payments for thesepurchases…

A: Current liabilities are those dues and obligations which needs to be settled by the business in…

Q: " In our opinion, the financial statements give a true and fair view of the state of the Company's…

A: An auditor is required to verify and check the accuracy of the financial records of the business. He…

Q: Which of these situations would require auditors to append an emphasis-of-matter paragraph about…

A: Answer:   Option d.

Q: The accountant at Borris Co has prepared the following reconciliation between the balance on the…

A: We have the following information: Balance on general ledger control account = $68,566 Credit…

Q: Which one of the following statements is NOT true? A. Details from the purchases journal are posted…

A: The debtors ledger is the book which is prepared to maintain a record of the money that is to be…

Q: Which of the following statements is not true concerning interim financial reporting and…

A: Companies that use the LIFO method may encounter a liquidation of base period inventories at an…

Q: For the 2021 audit of the financial statements, you are tasked to audit EMPLEO Corporation's…

A: Dividends is the part or share of profits that is, being distributed to the shareholders of the…

Q: Decide if the following statements are true or false and select the correct answer: If a company is…

A: Allowance is made from the net income from the business. So any uncollectible accounts are then…

Q: Accountants at UltraTech obtain their values for inventory and total assets, calculate the balance…

A: Inventory to assets ratio is a financial ratio used for the analysis of financials of the company.…

Q: Under the perpetual inventory system, all purchases of merchandise are debited to the account…

A: Perpetual inventory system: It is a method of inventory management that records real time…

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: Because of increasing profits and inventory prices, the company changed from FIFO to LIFO inventory,…

A: An auditor should provide an unqualified opinion on the financial statements if he believes that the…

Q: When a company uses LIFO for external reporting purposes FIFO for internal reporting pusposes, an…

A: LIFO reserve: LIFO reserve refers to the difference in the value of inventory, between the goods…

Q: The following general ledger accounts are included in the trialbalance for an audit client, Jones…

A: Cycle Balance sheet Accounts Income statement accounts Sales and collection Cash Accounts…

Q: What is the reason for the understatement of the net income reported by the branch in its separate…

A: Solution Cost of good sold is the cost acquiring or manufacturing the product that a company sells…

Q: The accountant for the Fred Company did not record a purchase of merchandise on credit or include…

A: The question is multiple choice question. Required  Choose the Correct Option.

Q: The Cloud Company employs a perpetual inventory system and the McKenzie Corporation uses a periodic…

A: Perpetual and periodic inventory system: In merchandise business, there are two types of inventory…

Q: Presented below are a number of facts related to Weller, Inc. Assume that no mention of these facts…

A: a. The company decided that, for the sake of conciseness, only net income should be reported on the…

Q: consistency concept

A: Option A is wrong because the statement is true. If consistency concept is followed in the…

Q: Match each definition with the term that best describes it. An income measure that includes gains…

A: Income statement: The income statement determines the net income of the business by subtracting the…

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.…

Inventory Accounting

Inventory accounting is that branch of accounting that helps in determining the specific value of assets at different stages of production and development.