Survey Of Accounting
5th Edition
ISBN: 9781259631122
Author: Edmonds, Thomas P.
Publisher: Mcgraw-hill Education,
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Chapter 3, Problem 25Q
To determine
Discuss the disadvantage of periodic inventory system, which is the major setback for
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20) Under a perpetual inventory system, inventory shrinkage and lost or stolen goods are more readily determined.
Which of the following is not a reason for the physical inventory count to differ from what isrecognized on the company’s books?A. mismanagementB. shrinkageC. damageD. sale of services to customers
Which of the following is not an advantage of a perpetual inventory system?
a. Assists in the prevention of stockouts
b. Requires less data processing effort than periodic systems
c. Maintains up-to-date inventory and cost of goods sold balances
d. Provides evidence of inventory shrinkage
Chapter 3 Solutions
Survey Of Accounting
Ch. 3 - 1. Define merchandise inventory. What types of...Ch. 3 - 2. What is the difference between a product cost...Ch. 3 - 3. How is the cost of goods available for sale...Ch. 3 - 4. What portion of cost of goods available for...Ch. 3 - 5. When are period costs expensed? When are...Ch. 3 - 6. If PetCo had net sales of 600,000, goods...Ch. 3 - Prob. 7QCh. 3 - 8. What are the effects of the following types of...Ch. 3 - 9. Northern Merchandising Company sold inventory...Ch. 3 - 10. If goods are shipped FOB shipping point, which...
Ch. 3 - 11. Define transportation-in. Is it a product or a...Ch. 3 - Prob. 12QCh. 3 - Prob. 13QCh. 3 - 14. Dyer Department Store purchased goods with the...Ch. 3 - 15. Eastern Discount Stores incurred a 5,000 cash...Ch. 3 - 16. What is the purpose of giving credit terms to...Ch. 3 - Prob. 17QCh. 3 - 18. Ball Co. purchased inventory with a list price...Ch. 3 - 22. Explain the difference between purchase...Ch. 3 - Prob. 20QCh. 3 - Prob. 21QCh. 3 - 25. What is the advantage of using common size...Ch. 3 - 27. What is the purpose of preparing a schedule of...Ch. 3 - 28. Explain how the periodic inventory system...Ch. 3 - Prob. 25QCh. 3 - Exercise 3-1 Determining the cost of financing...Ch. 3 - Exercise 3-2 Comparing a merchandising company...Ch. 3 - Exercise 3-3 Effect of inventory transactions on...Ch. 3 - Exercise 3-4 Effect of inventory transactions on...Ch. 3 - Exercise 3-5 Recording inventory transactions in a...Ch. 3 - Exercise 4-6A Understanding the freight terms FOB...Ch. 3 - Exercise 3-7 Effect of purchase returns and...Ch. 3 - Exercise 3-8 Accounting for product costs:...Ch. 3 - Effect of product cost and period cost: Horizontal...Ch. 3 - Cash Discounts and Purchase Returns On April 6,...Ch. 3 - Exercise 4-9A Determining the effect of inventory...Ch. 3 - Inventory financing costs Bill Norman comes to you...Ch. 3 - Effect of shrinkage: Perpetual system Ho Designs...Ch. 3 - Comparing gross margin and gain on sale of land...Ch. 3 - Single-step and multistep income statements The...Ch. 3 - Prob. 16ECh. 3 - Effect of cash discounts on financial statements:...Ch. 3 - Using common size statements and ratios to make...Ch. 3 - Prob. 19ECh. 3 - Determining cost of goods sold: Periodic system...Ch. 3 - Identifying product and period costs Required...Ch. 3 - Problem 4-23A Identifying freight costs Required...Ch. 3 - Effect of purchase returns and allowances and...Ch. 3 - Preparing a schedule of cost of goods sold and...Ch. 3 - Prob. 25PCh. 3 - Comprehensive cycle problem: Perpetual system At...Ch. 3 - Prob. 27PCh. 3 - Comprehensive cycle problem: Periodic system...Ch. 3 - Prob. 1ATCCh. 3 - ATC 3-2 Group Exercise Multistep income statement...Ch. 3 - Prob. 3ATCCh. 3 - Prob. 4ATC
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- LO2 Under the perpetual system of accounting for inventory, the current merchandise inventory and the cost of goods sold are not determined until the end of the accounting period when a physical inventory is taken.arrow_forwardIs there any reason to think that RR may be holding too much inventory?arrow_forwardOne reason for inventory is to prevent shutdowns. How does the JIT approach to inventory management deal with this potential problem?arrow_forward
- Why do consignment arrangements present a challenge in inventory management? Explain.arrow_forwardWhich of these statements is false? A. If cost of goods sold is incorrect, ending inventory is usually incorrect too. B. C. D.arrow_forwardWhich of the following would cause periodic ending inventory to be overstated? A. Goods held on consignment are omitted from the physical count. B. Goods purchased and delivered, but not yet paid for, are included in the physical count. C. Purchased goods shipped FOB destination and not yet delivered are included in the physical count. D. None of the abovearrow_forward
- What type of issues would arise that might cause inventory errors?arrow_forwardWhich of the following is a disadvantage of the perpetual inventory system? A. Inventory information is in real-time. B. Inventory is automatically updated. C. It allows managers to make current decisions about purchases, stock, and sales. D. It is cost-prohibitive.arrow_forwardWhich of the following is not an advantage of a perpetual inventory system? a. assits in the prevention of stockouts b. requires less data processing effort than periodic system c. maintains up-to-date inventory and cost of goods sold balances d. provides evidence of inventory shrinkagearrow_forward
- 66. Which of the following events or transactions would not lead to the recognition of the cost of inventory as expense? The inventory is written down The inventory is distributed for free The inventory is exchanged for dissimilar inventory The inventory is consumed in the manufacturing processarrow_forward21. What is the effect on net income if a company fails to record a purchase in transit (FOB shipping point) and also fails to include the purchase in physical inventory?a. Income is overstated.b. Income is understated.c. Not enough information is provided to determine the answer.d. Income is correct.arrow_forwardExplain Potential Misstatements- Inventory/ Cost of Goods Sold and the description of misstatements and their examples. The misstatements of inventory cost, misstatements of inventory quantities and Early(Late) recognition of purchases - “cutoff problems”arrow_forward
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