Concept explainers
Concept introduction:
Operating income is the profit earned by the company after considering all operating income and expenses. In other words it is the income earned by the company from its operations.
Just in time inventory system is the inventory system in which company maintains on stock and orders inventory as and when required.
Requirement 1:
We have to determine the impact on operating cash flows.
Concept introduction:
Operating income is the profit earned by the company after considering all operating income and expenses. In other words it is the income earned by the company from its operations.
Just in time inventory system is the inventory system in which company maintains on stock and orders inventory as and when required.
Requirement 2:
We have to determine the impact of JIT on both the companies.
Concept introduction:
Operating income is the profit earned by the company after considering all operating income and expenses. In other words it is the income earned by the company from its operations.
Just in time inventory system is the inventory system in which company maintains on stock and orders inventory as and when required.
Requirement 3:
We have to determine the impact of JIT on operating cash flows.
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MANAGERIAL ACCOUNTING FUND. W/CONNECT
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- 1. Which statement applies to the specific identification inventory method? This method is also known as the average cash flow method. The ending inventory is made up of the most recent purchases. Each unit sold is identified with a specific purchase. This is closely related to a perpetual inventory system. 2. Why does the specific identification inventory method work well for business such as automobile dealerships? The inventory keeps track of the automobiles that are first-in first-out. This method works because each automobile has a unique serial number. It best shows the current cash flow at all times. It’s the easiest method to factor the perpetual inventory costs.arrow_forwardA company records inventory at gross invoice price. Theoretically, how should the following affect the cost of inventory? Interest on inventory loan Cash discount available Group of answer choices No effect No effect Increase No effect No effect Decrease Increase Decreasearrow_forwardWalMart and other retailers have computerized cash registers to ring up sales. How does this feature help these firms manage inventory? Purchase prices change over time. When ordering inventory to replace what has been sold, the purchasing agent might find a price increase. Discuss and explain one of the following: First in First Out Last in First Out Weighted Average Cost Specific Identification Lower of Cost or Marketarrow_forward
- Walmart uses a perpetual inventory system. Which of the following is a reason why Walmart needs to take a physical inventory? To check the accuracy of the perpetual inventory records. O To determine cost of goods sold for the accounting period. O To compute inventory ratios. O All of the choices are correct.arrow_forwardWhich one of the following statement indicates the Inventory turnover ratio? Select one: a. How quickly company prepared its inventory b. How quickly company converts its inventory into cash c. How quickly company purchases its inventory d. How quickly company sells its inventoryarrow_forwardUse the last-in, first-out (LIFO) cost allocation method, with perpetual inventory updating, to calculate (a) sales revenue, (b) cost of goods sold, and c) gross margin for A75 Company, considering the following transactions.arrow_forward
- Use the first-in, first-out (FIFO) cost allocation method, with perpetual inventory updating, to calculate (a) sales revenue, (b) cost of goods sold, and c) gross margin for A75 Company, considering the following transactions.arrow_forwardUsing the perpetual inventory system, what account is debited when a business finds that its physical count of inventory is greater than the recorded amount?arrow_forwardUse a spreadsheet and the following excerpts from Hileah Companys financial information to build a template that automatically calculates (A) inventory turnover and (B) number of days sales in inventory, for the year 2018.arrow_forward
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