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Unformatted text preview: ACCT1501 2011S1 Week 9 Preparation Questions Solutions Preparation Questions: Discussion Question 8.1, 8.2; 9.1, 9.2, 9.16; Problems 8.3, 8.9, 8.13; 9.4, 9.6, 9.14; CASE 9A (parts 1- 6) 8.1 The periodic inventory system is a method of calculating inventory that uses data on beginning inventory, additions to inventory, and an end-of-period count to deduce the cost of goods sold. No records are maintained for individual inventory items. By contrast, the perpetual inventory system is a method of controlling inventory that maintains continuous records on the flow of units of inventory. 8.2 Under the perpetual inventory system, it is necessary to make an assumption regarding the flow of costs through the business, for example, whether the first items acquired are the first ones sold or whether ending inventory and cost of goods sold are composed of a mixture of old and new items. At the time of sale a record is made of the cost price of the goods based on the cost flow assumption. Thus the accounting records provide a record of the cost of goods sold. However under the periodic inventory system there is no continuous record of cost of goods sold. At the end of the accounting period it is calculated by adding purchases for the period to opening inventory and then deducting closing inventory. 9.1 The components of the cost of an asset include all those costs that are required to make it suitable for the purpose intended....
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This note was uploaded on 03/19/2012 for the course ACCT 1501 taught by Professor Helen during the Three '09 term at University of New South Wales.
- Three '09