Accounting methods period after period so that the

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accounting methods period after period so that the financial statements of succeeding periods will be comparable _ _ _ _ 4. Consig nee An estimate of days needed to convert the inventory available at the end of the period into receivables or cash _ _ _ _ 5. Days' sales in inventory One who receives and holds goods owned by another for purposes of selling the goods for the owner _ _ _ _ 6. Gross profit method The method of assigning costs to inventory where the purchase cost of each item in inventory is identified and used to determine the cost of inventory _ _ _ _ 7. Cons istency principle The number of times a company's average inventory is sold during an accounting period _ _ _ _ 8. Cons ervatism principle The required method of reporting inventory at market when market is lower than cost _ _ _ _ 9. Sp ecific identif ication method A method for estimating inventory based on the ratio of the amount of goods for sale at cost to the amount of goods for sale at retail prices _ _ _ _ 10. Lo wer of cost or market The principle that aims to select the less optimistic estimate when two or more estimates are about equally likely _ _ _ _
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133.Identify the inventory valuation method that is being described for each situation below. In all cases, assume a period of rising prices. Use the following to identify the inventory valuation method: a. The method that can only be used if each inventory item can be matched with a specific purchase and its invoice. b. The method that will cause the company to have the lowest income taxes. c. The method that will cause the company to have the lowest cost of goods sold. d. The method that will assign a value to inventory that approximates its current cost. e. The method that will tend to smooth out erratic changes in costs. 134.Identify the items that are included in merchandise inventory. (In your answer address the special situations of goods in transit, consigned goods and damaged goods.) 135.What costs are assigned to merchandise inventory? 136.Describe the internal controls that must be applied when taking a physical count of inventory. 137.Explain the effects of inventory valuation methods on the cost of ending inventory, income and income taxes.
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138.How do the consistency principle and the full disclosure principle affect inventory valuation? 139.What is the effect of an error in the ending inventory balance on the income statement? 140.Explain how the inventory turnover ratio and the days' sales in inventory ratio are used to evaluate inventory management. 141.Identify and describe the four inventory valuation methods. 142.Explain why the lower of cost or market rule is used to value inventory. 143.Discuss the important accounting features of a periodic inventory system including accounts and procedures used.
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144.Explain the difference between the retail inventory method and gross profit inventory method for valuing inventory?
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  • Summer '13
  • James
  • retail inventory

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