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Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094

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BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094
Textbook Problem

Before inventory purchases are recorded, the receiving report should be reconciled to what documents?

To determine

Inventory refers to the raw materials, work in progress, and finished goods that are held by the business unit for the purpose of selling or making it ready for sale, in the future date.

To state: the documents that must be reconciled with the receiving report before inventory purchases are recorded.

Answer

The receiving report must be reconciled with the initial purchase order and vendor’s invoice before inventory purchases are recorded and paid.

Explanation

This procedure of reconciliation verifies that the inventory matches with the type and quantity of ordered inventory.  Moreover, it also validate that the vendor’s invoice is charging for the actual quantity of inventory received as agreed upon price.

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