Gen Combo Looseleaf Financial And Managerial Accounting; Connect Access Card
Gen Combo Looseleaf Financial And Managerial Accounting; Connect Access Card
18th Edition
ISBN: 9781260149197
Author: williams
Publisher: MCG
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Chapter 8, Problem 1STQ
To determine

Identify the option which is correct regarding the primary purpose of inventory cash flow assumption.

Expert Solution & Answer
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Answer to Problem 1STQ

b. Offset against revenue an appropriate cost of goods sold.

Explanation of Solution

Cost flow assumptions can be referred to as the method which determines the flow of costs when an inventory is sold. Instead of keeping a track record for cost of each product sold, a company adopts these methods, and identifies which units were sold. Then, this calculated cost of goods sold is deducted from the revenue to ascertain the operating revenue of business.

Cash flow assumptions differ from specific identification method because the actual physical movement of goods may be unrelated to the flow of costs.

Option “a, c, and d” are not correct answer as per above explanation, only option “b” is correct answer as per above explanation. Hence, the correct answer is option b.

Conclusion

Therefore, the correct option is (b), offset against revenue an appropriate cost of goods sold.

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Chapter 8 Solutions

Gen Combo Looseleaf Financial And Managerial Accounting; Connect Access Card

Ch. 8 - 5. What are the characteristics of a just-in-time...Ch. 8 - 6. Why do companies that use perpetual inventory...Ch. 8 - 7. Under what circumstances might a company write...Ch. 8 - 8. What is meant by the year-end cutoff of...Ch. 8 - 9. Explain why errors in the valuation of...Ch. 8 - 10. Briefly explain the gross profit method of...Ch. 8 - 11. A store using the retail inventory method...Ch. 8 - 12. How is the inventory turnover computed? Why is...Ch. 8 - 13. Baxter Corporation has been using FIFO during...Ch. 8 - In anticipation of declining inventory replacement...Ch. 8 - Notes to the financial statements of two clothing...Ch. 8 - BRIEF EXERCISE 8.1 FIFO Inventory Smalley, Inc.,...Ch. 8 - BRIEF EXERCISE 8.2 LIFO Inventory Mason Company...Ch. 8 - BRIEF EXERCISE 8.3 Average-Cost Inventory Fox...Ch. 8 - BRIEF EXERCISE 8.4 FIFO and LIFO Inventory Murphy,...Ch. 8 - BRIEF EXERCISE 8.5 FIFO and Average-Cost...Ch. 8 - BRIEF EXERCISE 8.6 Inventory Shrinkage Bruing...Ch. 8 - BRIEF EXERCISE 8.7 Inventory Error Pixy, Inc.,...Ch. 8 - BRIEF EXERCISE 8.8 Inventory Error Due to...Ch. 8 - BRIEF EXERCISE 8.9 Inventory Turnover Alamo...Ch. 8 - BRIEF EXERCISE 8.10 Inventory Turnover Rouse...Ch. 8 - EXERCISE 8.1 Accounting Terminology Listed as...Ch. 8 - EXERCISE 8.2 Cost Flow Assumptions On May 10,...Ch. 8 - EXERCISE 8.3 Physical Flow versus Cost Flow...Ch. 8 - EXERCISE 8.4 Effects of Different Cost Flow...Ch. 8 - EXERCISE 8.5 Transfer of Title Jensen Tire had two...Ch. 8 - Prob. 6ECh. 8 - EXERCISE 8.7 Costing Inventory in a Periodic...Ch. 8 - EXERCISE 8.8 Effects of Errors in Inventory...Ch. 8 - EXERCISE 8.9 Estimating Inventory by the Gross...Ch. 8 - EXERCISE 8.10 Estimating Inventory by the Retail...Ch. 8 - Prob. 11ECh. 8 - Prob. 12ECh. 8 - EXERCISE 8.13 Inventory Turnover A recent annual...Ch. 8 - Prob. 14ECh. 8 - EXERCISE 8.15 Using the Financial Statements of...Ch. 8 - Prob. 1APCh. 8 - PROBLEM 8.2A Alternative Cost Flow Assumptions in...Ch. 8 - PROBLEM 8.3A Alternative Cost Flow Assumptions in...Ch. 8 - Prob. 4APCh. 8 - PROBLEM 8.5A Periodic Inventory Costing...Ch. 8 - PROBLEM 8.6A Effects of Inventory Errors on...Ch. 8 - PROBLEM 8.7A Retail Method Between The Ears...Ch. 8 - PROBLEM 8.8A FIFO versus LIFO Comparisons Walmart...Ch. 8 - Prob. 1BPCh. 8 - PROBLEM 8.2B Alternative Cost Flow Assumptions in...Ch. 8 - PROBLEM 8.3B Alternative Cost Flow Assumptions in...Ch. 8 - Prob. 4BPCh. 8 - PROBLEM 8.5B Periodic Inventory Costing...Ch. 8 - PROBLEM 8.6B Effects of Inventory Errors on...Ch. 8 - PROBLEM 8.7B Retail Method Song Meister is a...Ch. 8 - PROBLEM 8.8B FIFO versus LIFO Comparisons J.C....Ch. 8 - Prob. 1CTCCh. 8 - CASE 8.2 LIFO Liquidation Jackson Specialties has...Ch. 8 - CASE 8.3 Dealing with the Bank Millennium Frozen...Ch. 8 - CASE 8.4 Inventory Turnover A company’s inventory...Ch. 8 - Prob. 2CP
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