1.
Introduction: The retail inventory method considers all retail amounts, i.e. current selling prices. To calculate the ending inventory, subtract the goods available for sale at retail from the sales at retail.
The accounting for reporting the warehousing costs related to wholesale inventories.
2.
Introduction: The retail inventory method considers all retail amounts, i.e. current selling prices. To calculate the ending inventory, subtract the goods available for sale at retail from the sales at retail.
Principle of accounting and the amount of wholesale inventories to be reported in
3.
Introduction: The retail inventory method considers all retail amounts, i.e. current selling prices. To calculate the ending inventory, subtract the goods available for sale at retail from the sales at retail.
The treatment of freight-in costs, net markups, and net markdowns.
4.
Introduction: The retail inventory method considers all retail amounts, i.e. current selling prices. To calculate the ending inventory, subtract the goods available for sale at retail from the sales at retail.
The treatment of net markdowns affect on the cost-to-retail percentage.
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INTERMEDIATE ACCOUNTING (LCPO)
- The following information is taken from a companys records. Applying the lower-of-cost-or-market approach, what is the correct value that should be reported on the balance sheet for the inventory?arrow_forward1. Selling expenses are shown in which of the following statement?a. Cost of Goods Soldb. Profit and Loss Accountc. Manufacturing Accountd. Profit and Loss Appropriation Account 2. Which of the following is used to determine the cost of goods sold?a. Beginning Inventory + Purchasesb. Beginning Inventory + Purchases - Salesc. Beginning Inventory + Net Purchases + Direct Expenses - Ending Inventoryd. Ending Inventory + Purchases - Beginning Inventory 3. Which of the following would not be considered as a component of the "cost" of stock?a. Salaries of selling staffb. Transportation inward costsc. Import dutiesd. Purchase pricearrow_forwardWhich of the following statements is correct? Group of answer choices A)Revenue is recognized at the time of shipment when goods are shipped FOB destination. B)Sales returns and allowances are reported as operating expenses on an income statement. C)Revenue is recorded when title and risks of ownership transfer to the buyer. D)Sales discounts are reported as operating expenses on an income statement.arrow_forward
- In accounting for by-products, when the by-products are sold for more than the estimated sales value, the difference is: a. credited to Gain or Loss on Sale of By-Product b. debited to Gain or Loss on Sale of By-Product c. immaterial, so not recorded. d. credited to By-Product Inventory.arrow_forwardWhich of the following statements about FIFO is true? Select one: a. All of the statements are correct b. Cost of goods sold is calculated using the costs of the earliest purchased inventory. c. The value of merchandise inventory is made up of the costs of the most recently purchased inventory. d. Under FIFO, a schedule is used to track the different costs of purchased inventory.arrow_forwardHow much is the adjustment to the Cost of Sales account to set up its correct balance?arrow_forward
- Which of the following statements is correct in the context of the Income Statement prepared by a Retailer (of Inventory)? Select one: O a. Gross Profit plus Operating Expenses equals Net Profit. O b. Net Sales Revenue minus (Cost of Goods Sold + Operating Expenses) equals Net Profit. O c. Net Sales Revenue minus Operating Expenses equals Gross Profit. O d. Net Sales Revenue minus Cost of Goods Sold equals Net Profit.arrow_forward1. Explain the effect of each inventory cost flow method on the company's net income 2. Recommed one method and explain the reasons for your recommendationarrow_forward1. Which of the following accounts is not included in inventory? a. Raw material b. Team c. Finished goods d. Materials 2. Why is inventory included in the net income determination? a. To determine the cost of goods sold b. To determine sales income c. To determine the return of merchandise d. Inventory is not included in the determination of net income 3. Which of the following is a feature of the perpetual inventory system? a. Inventory purchases are debited to the Purchasing account. b. Inventory records are not kept for every item. c. The cost of what is sold is recorded in each sale. d. The cost of goods sold is determined as the quantity of purchases minus the change in inventory.arrow_forward
- Which of the following statements is incorrect? Select one: a. By using the IFRS, goods shipped on consignment from a seller to another company should be included in the inventory of the seller. b. Many argue that LIFO provides a better matching of current costs against revenue from a financial reporting point of view. c. Both IFRS and GAAP account for inventory acquisitions at historical cost and value inventory at the lower-of-cost-or-net-realizable value subsequent to acquisition. d. Both inventory and net income are higher when companies use LIFO in a period of inflation.arrow_forwardWhat needs to be considered when not only counting inventory, but likewise in the final valuation of inventory? Why is the inventory valuation so important for accounting purposes (for example, how would inventory errors affect the balance sheet and income statement - beginning vs. ending inventory). (**Hint - ending inventory for the initial period then becomes beginning inventory in the next reporting period - and both are used in the computation of cost of goods sold, used to compute gross profit in the income statement)arrow_forwardWhich income statement account(s) would be affected by a policy choice at the same time as the inventory balance sheet account. a. Bad debts expense b. Cost of goods sold expense c. Depreciation or amortisation expense d. Sales revenuearrow_forward
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