Intermediate Accounting Exam 2

Refers to the assets of a company

• COGS

• Inventory

Is the expense related to inventory

• COGS

• Inventory

Goods that are purchased primarily in finished form and retailers

Costs include: Purchase Price plus any other cost necessary to get goods un condition and location for sale

• Merchandising Inventory

• Manufacturing Inventory

Goods that are produced by a manufacturing company to be sold to wholesalers, retailers, other manufacturers, or consumers

Consist of: Raw Materials, Work-in-process, Finished Goods

• Merchandising Inventory

• Manufacturing Inventory

Perpetual Inventory System:

• Continually adjust the inventory account for each change in inventory caused by a: Purchase, sale, or return of inventory

• Continually adjust the cost of goods sold account each time goods are: Sold or returned by a customer

• Allows Management to:

  -Determine goods on hand on any date

  -Determine the number of items sold during a period

• Adjust the inventory account and records cost of sold only at the end of each reporting period

• Records merchandise purchases, purchase returns, purchase discounts, and freight-in in temporary accounts

Merchandiser using FIFO perpetual will be different from one that uses FIFO periodic

• True

• False

Accounting for goods on transit for inventory owner ship depends on

• Ownership of goods

• If buyer is found

• If buyers is not found

• Reduction of purchases

Goods on Consignment for inventory owner ship depends on

• Ownership of goods

• Consignee

• Consignor

• Reduction of purchases

Sales returns for perpetual inventory owner ship depends on

• Ownership of goods

• Consignee

• Consignor

• Reduction of purchases

Seller's location. Buyer has rights to inventory as soon as items are shipped (put) in truck

• F.O.B. Shipping point

• F.O.B. Destination point