Describe the backflushing or post-deduct system of inventory recordkeeping

Q: what work  will an auditor carry  out  prior  to  the  commencement  of  the inventory count.

A: The audit procedure follows by the auditor for identifying he evidences regarding the accuracy and…

Q: Why is it important to obtain shipping and receiving cutoff information during the inventory…

A: Cut-off Procedures:   The audit procedures applied to separate the transactions from one period to…

Q: Valuing Inventory and Recording Entries Using Relative Sales Value Method

A: Inventory valuation is very important and is generally done at the end of the accounting year. The…

Q: Determine the effects of inventory errors on the financial statements.

A: If you understated ending inventory, your cost of goods sold will be overstated by the error amount,…

Q: The entry to record inventory shrinkage under a perpetual inventory system would include a debit to:…

A: Explanation: When There is Inventory shrinkage Under the perpetual inventory system The following…

Q: Explain what is meant by the Internal Revenue Service conformity rule with respect to the inventory…

A: Internal Revenue Service conformity rule is when prices rise and inventory quantities are not…

Q: True or False Merchandise inventory is reported in the long-term assets section of the statement of…

A: Long-term assets:                            Long-term assets are those assets called noncurrent…

Q: Describe the alternative approaches for recording inventory write-downs.

A: Inventory write-down: As per GAAP (Generally Accepted Accounting Principles), the companies are…

Q: Is an adjusting entry needed for inventory shrinkage when using the periodic inventory system?…

A: Definition:

Q: Indicate the effects of inventory errors on the financial statements

A: Solution- 1-A merchandising company must be sure that it has properly valued its ending inventory.…

Q: What is inventory shrinkage? Describe the adjusting entry that would be recorded to account for…

A: Inventory shrinkage: When there is a difference between inventory as per books and actual inventory…

Q: Explain which physical units of goods should be included in inventory.

A: Inventory:   It refers to an accounting term used to describe the goods in various stages in the…

Q: Describe the types of errors in inventory.

A:

Q: Explain the term inventory turnover.

A: The ratio analysis is performed to analyze the statements of the business on the basis of various…

Q: Discuss and explain the major uses of the gross profit method of inventory estimation.

A: Generally  we get gross profit  after trading a/c prepared it means after net sales  minus net…

Q: Explain the appropriate accounting treatment required when a change in inventory method is made.

A: Definition:   Change in inventory method: Change in inventory method is said to be the difference…

Q: What account is debited when recording the payment of freight in when using the periodic inventory…

A: Definition:

Q: What is the method of accounting of inventory in which the cost of goods is recorded each time a…

A: The cost of goods included the cost of goods that are sold during the period.

Q: The two main inventory accounting systems are the a. perpetual and periodic. b. purchase and sale.…

A: Purchase and sale are the transaction made by the company. It is not an inventory system. Returns…

Q: Determine the cost assigned to ending inventory and to cost of goods sold using FIFO.

A: Lets start with basic understanding. There are two system for inventory valuation which are, (1)…

Q: Explain how a periodic inventory system operates.

A: Inventory: It can be defined as all the goods, items, materials, and merchandise that are held by a…

Q: What are the main differences between periodic inventory system and perpetual inventory system?…

A:

Q: Which of the following statements appropriately describes attributes of perpetual and periodic…

A: Inventory is the goods which company is having to sale or which is also known as goods available for…

Q: Explain the audit for inventory

A: Directional testing is been used to audit the procedures  of statement of financial position items.

Q: what is the amount allocated to ending inventory on a LIFO basis?

A: Using the LIFO method, the last purchased units are sold first. Periodic inventory records inventory…

Q: The two main inventory accounting systems are the Perpetual and periodic. purchase and sale.…

A: Merchandise Inventory: Merchandise is the stock of goods bought by a wholesaler, or a retailer, or a…

Q: In your own words, discuss the differences between a perpetual and periodic inventory system. Your…

A: Inventory is the current asset posted on the balance sheet of the company.

Q: What are the reasons for making an estimate of the value of ending inventory?

A: Ending inventory is the value of goods available in the stock at the end of the period

Q: When recording purchase returns and purchase allowances under the periodic inventory system, what…

A: Periodic Inventory System:Periodic inventory system is a system in which the inventory is updated…

Q: Explain the types of inventory and the differences between a perpetual inventory system and a…

A:

Q: Explain how the sale of inventory on account is recorded under a periodic system. How does this…

A:

Q: Describe the typical approach for recording inventory write-downs.

A: Inventory write-down: As per GAAP (Generally Accepted Accounting Principles), the companies need to…

Q: Would the writing down of obsolete inventory be recorded in a special journal or the general…

A: Journal: A journal can be defined as the historical record of the financial transactions. Documents…

Q: Explain the accounting treatment of material inventory errors discovered in an accounting period…

A: Materials inventory: Material inventories are the primary materials which are used in the…

Q: Which of the following should be included in inventory on the balance sheet? Goods out on approval…

A: Goods purchased that are in transit F.O.B destination and raw materials will be recorded and…

Q: Describe the integration of the Inventory Ledger with the Payables, Receivables and General Ledgers.

A: Solution:- Introduction:- An integrated accounting system is application software in which all the…

Q: Describe the calculation of the cost of goods sold when using the periodic inventory system.

A: Periodic inventory system: The method or system of recording the transactions related to inventory…

Q: Provide a critique of the accounting policy for inventory included in the financial statement in…

A: The accounting standard prescribes the accounting treatment for inventories and sets the guidelines…

Q: Describe the recording process for purchases of merchandise inventory using a Perpetual inventory…

A: Under perpetual inventory system, changes in merchandise inventory account are recorded after each…

Q: Briefly contrast the accounting procedures in perpetual andperiodic inventory systems.

A: Following are the differences between accounting procedures in perpetual and periodic inventory…

Q: A purchase order establishes an initial record of the receipt of the inventory. O True O False

A: A purchase order or PO refers to a commercial document officially issued by the buyer to a seller…

Q: What are the two journal entries involved when recording the sale of inventory when using the…

A: Perpetual inventory system refers to the inventory system that maintains the detailed records of…

Inventory Valuation

Before discussing the topic inventory valuation let’s discuss the meaning of inventory. In accounting, inventory is also known as stock. Inventory means all the finished goods, materials, merchandise that a business holds for the purpose of selling it in the market with the motive of earning profit.