3 control access to inventory records 4 insure

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3. Control access to inventory records 4. Insure inventory against loss or damage. 5. Implement security measures, such as cameras. Identify the advantages of using a perpetual inventory system.
Determine which of the following statements are correct regarding the difference between physical flow and the cost flow of goods. 1. Physical flow is focused on the actual movement of goods. 2. Cost flow is an assumption about which goods/items are sold 3. Perishable items must have an actual physical flow of FIFO. 4. A business may adopt any cost flow assumption when accounting for perishable items. Demonstrate how inventory costs are treated both as assets and expenses by selecting the correct statement(s) below. 1. Inventory items sold are considered part of the cost of goods sold on the income statement. 2. Inventory items retained at the end of the period are considered part of merchandise inventory on the balance sheet. 3. Inventory costs are treated as an expense when they are sold.
Which statements below correctly describe the relationship of costs of goods sold and ending inventory? 1. Costs of goods sold plus ending inventory equal the total goods available for sale. (costs of foods sold + ending inventory = total goods available for sale) 2. Costs of goods available for sale MUST be allocated between costs of goods sold and ending inventory. Sparky’s incorrectly included inventory that was on consignment in its ending inventory count. Consequently, the ending inventory was OVERSTATED on the balance sheet. Explain how this error will affect this year’s income statement.

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