Which Of The Following Statements Is False In A Perpetual

Which Of The Following Statements Is Falsein A Perpetual

QUESTION . Which of the following statements is FALSE? In a perpetual inventory system, the "cash register" at the store is a computer terminal that records sales and updates inventory records. Even in a perpetual inventory system, a business must count inventory at least once a year. Restaurants and small retail stores often use the periodic inventory system.

In a periodic inventory system, merchandise inventory and purchasing systems are integrated with the records for Accounts Receivable and Sales Revenue. 5 points QUESTION . Which of the following is true of freight in? It is an administrative expense. It is a selling expense. It is the transportation cost on purchases. It is the transportation cost on sales. 5 points QUESTION . Merchandise inventory accounting systems can be broadly categorized into two types. They are __________. FIFO and LIFO perpetual and periodic wholesale and retail manufacturer and producer 5 points QUESTION . Which of the following is subtracted from net sales revenue to arrive at gross profit on a multi-step income statement? Cost of goods available for sale Cost of goods sold Sales discounts and sales returns and allowances Operating expenses 5 points QUESTION . A company that uses the perpetual inventory system purchases inventory for $61,000 on account, with terms of 3/10, n/30. Which of the following is the journal entry to record the payment made within 10 days? A debit to Accounts Payable for $61,000, a credit to Cash for $59,170, and a debit to Merchandise Inventory for $1,830 A debit to Accounts Payable for $61,000, a credit to Merchandise Inventory for $1,830, and a credit to Cash for $59,170 A debit to Merchandise Inventory for $1,830, a debit to Accounts Payable for $61,000, and a credit to Cash for $62,830 A debit to Accounts Payable for $59,170, a debit to Merchandise Inventory for $1,830, and a credit to Cash for $61, points QUESTION . What does "2/10" mean, with respect to "credit terms of 2/10, n/30"? A discount of 2 percent will be allowed if the invoice is paid within 10 days of the invoice date. Interest of 2 percent will be charged if the invoice is paid after 10 days from the date on the invoice. A discount of 10 percent will be allowed if the invoice is paid within two days of the invoice date. Interest of 10 percent will be charged if invoice is paid after two days. 5 points QUESTION . The term "freight out" refers to __________. transportation costs on purchases cost of inventory purchased costs that are not actually paid in cash transportation costs on sales 5 points QUESTION . If goods are sold on terms free on board (FOB) shipping point, the __________. seller normally pays the transportation costs buyer normally pays the transportation costs buyer and the seller split the transportation costs shipping company bears the transportation cost 5 points QUESTION . Changing from the LIFO (Last-In, First-Out) to the specific identification method of valuing inventory ignores the principle of __________. conservatism consistency disclosure materiality 5 points QUESTION . A company decides to ignore a very small error in its inventory balance. This is an example of the application of the __________. conservatism materiality concept disclosure principle consistency principle 5 points QUESTION . A company purchased 400 units for $20 each on January 31. It purchased 520 units for $26 each on February 28. It sold a total of 560 units for $40 each from March 1 through December 31. What is the amount of ending inventory on December 31 if the company uses the first-in, first-out (FIFO) inventory costing method? (Assume that the company uses a perpetual inventory system.) $9,360 $4,960 $7,200 $2, points QUESTION . Which of the following is the correct formula to calculate weighted-average unit cost for merchandise inventory? Weighted-average unit cost = Cost of goods available for sale + Number of units available Weighted-average unit cost = Cost of goods available for sale ÷ Number of units available Weighted-average unit cost = Cost of goods available for sale - Number of units available Weighted-average unit cost = Cost of goods available for sale / Number of units available 5 points QUESTION . Blanchard, Inc. provided the following for 2017: Cost of Goods Sold (Cost of sales) $1,200,000 Beginning Merchandise Inventory 325,000 Ending Merchandise Inventory 625,000 Calculate the company's inventory turnover ratio for the year. (Round your answer to two decimal places.) 3.69 times per year 2.53 times per year 1.92 times per year 1.26 times per year 5 points QUESTION . Under the weighted-average method for inventory costing, the cost per unit is determined by __________. dividing the cost of goods available for sale by the number of units available dividing the cost of goods available for sale by the number of units in beginning inventory multiplying the number of units purchased with the weighted-average cost multiplying the cost of goods available for sale by the ending weighted-average cost of the previous accounting period 5 points QUESTION . A company purchased 100 units for $30 each on January 31. It purchased 400 units for $20 each on February 28. It sold a total of 470 units for $110 each from March 1 through December 31. If the company uses the last-in, first-out inventory costing method, calculate the amount of ending inventory on December 31. (Assume that the company uses a perpetual inventory system.) $600 $2,400 $900 $ points QUESTION . Misty, Inc. had 24,000 units of ending inventory that were recorded at the cost of $8.00 per unit using the FIFO method. The current replacement cost is $4.50 per unit. Which of the following amounts would be reported as Ending Merchandise Inventory on the balance sheet using the lower-of-cost-or-market rule? $192,000 $300,000 $216,000 $108, points QUESTION . Which of the following is the correct formula to calculate inventory turnover? Inventory turnover = Cost of goods sold / Average merchandise inventory Inventory turnover = Cost of goods sold ÷ Average merchandise inventory Inventory turnover = Cost of goods sold + Average merchandise inventory Inventory turnover = Cost of goods sold - Average merchandise inventory 5 points QUESTION . The ending merchandise inventory for the current year is overstated by $25,000. What effect will this error have on the following year's net income? The net income will be overstated by $50,000. The net income will be overstated by $25,000. The net income will be understated by $25,000. The net income will be understated by $50,000.

5 points QUESTION . A company that uses the perpetual inventory system purchased 500 pallets of industrial soap for $10,000 and paid $750 for the freight-in. The company sold the whole lot to a supermarket chain for $14,000 on account. The company uses the specific-identification method of inventory costing. Which of the following entries correctly records the cost of goods sold? Cost of Goods Sold 10,750 Merchandise Inventory 10,750 Merchandise Inventory 10,750 Cost of Goods Sold 10,750 Cost of Goods Sold 10,000 Sales Revenue 10,000 Cost of Goods Sold 10,000 Merchandise Inventory 10, points QUESTION . A company that uses the perpetual inventory system sold goods for $2,500 to a customer on account. The company had purchased the inventory for $500. Which of the following journal entries correctly records the cost of goods sold? Cost of Goods Sold 500 Sales Revenue 500 Merchandise Inventory 500 Cost of Goods Sold 500 Cost of Goods Sold 500 Merchandise Inventory 500 Accounts Receivable 500 Sales Revenue points

Paper For Above instruction

The inventory management and accounting systems are fundamental components of a business's operations, directly impacting financial accuracy and decision-making. A comprehensive understanding of these systems, including the distinctions between perpetual and periodic inventories, cost flow assumptions, and related transactions such as freight-in and freight-out, is essential for accounting professionals and business managers alike.

Starting with the fundamental difference, the perpetual inventory system continuously updates inventory records with each sale and purchase, facilitated by real-time computer systems. This method provides immediate and accurate inventory balances, making manual counts less frequent but still necessary at least once a year for verification and physical stock reconciliation (Weygandt, Kimmel, & Kieso, 2020). Conversely, the periodic inventory system updates inventory records at specific intervals, typically through physical counts, which also integrate with accounting records for receivables and revenue (Garrison, Noreen, & Brewer, 2018).

In analyzing expenses related to inventory transactions, freight-in represents transportation costs incurred to bring goods into the company’s inventory and is thus classified as part of the cost of goods purchased (Kotler & Keller, 2016). This expense is capitalized and added to the inventory value, increasing the cost basis for future sale calculations. Freight-out, on the other hand, pertains to transportation expenses on sales, often considered a selling expense and reported separately on financial statements (Heising & Zdanowicz, 2020).

Accounting for inventory involves different systems and assumptions like FIFO, LIFO, and specific identification. FIFO assumes that the oldest inventory items are sold first, leaving the most recent costs in ending inventory. LIFO assumes the newest are sold first, influencing both cost of goods sold and ending inventory valuation, especially under inflationary conditions (Bhimani et al., 2018). The specific identification method uniquely tracks individual items, ideal for high-value or uniquely identifiable goods.

The choice of inventory valuation affects financial metrics such as gross profit and inventory turnover ratios. Gross profit is calculated by deducting the cost of goods sold from net sales, while inventory turnover ratio measures how efficiently inventory is sold, calculated by dividing cost of goods sold by average inventory (Brigham & Ehrhardt, 2019). These ratios help assess operational performance and inventory management effectiveness.

Errors in inventory measurement can distort financial reports. For example, overstating ending inventory by $25,000 in one year results in an overstatement of net income in the subsequent year by the same amount, due to the closing balance being carried into the next period's beginning inventory (Gibson, 2019).

Moreover, understanding credit terms such as "2/10, n/30" clarifies payment strategies and discounts available to buyers, influencing cash flow and profitability (Wild, Subramanyam, & Halsey, 2018). Terms like FOB shipping point determine which party bears transportation costs, affecting inventory valuation and responsibility for shipping expenses.

From a managerial perspective, choosing between inventory methods like FIFO, LIFO, or weighted average is often influenced by tax considerations, market conditions, and financial reporting objectives. FIFO typically results in higher inventory values and net income during inflation, whereas LIFO can provide tax benefits by reducing taxable income (Harrison & Horngren, 2018). The weighted-average method smooths out price fluctuations, assigning an average cost to all units, simplifying inventory management (Kieso, Weygandt, & Warfield, 2019).

In conclusion, effective inventory management and accurate accounting practices are vital for assessing a company's financial health. Combining inventory valuation techniques with robust systems and understanding transactional nuances ensures reliable financial reporting, supports strategic decision-making, and maintains compliance with accounting standards (Farneti & Guthrie, 2018). As businesses navigate changing economic environments, mastery of these concepts remains essential for sustainable growth and profitability.

References

• Bhimani, A., Horngren, C. T., Datar, S. M., Rajan, M., & Raman, K. (2018). Management and Cost Accounting. Pearson Education.
• Farneti, F., & Guthrie, J. (2018). Embracing accounting research as an effective form of corporate governance. Critical Perspectives on Accounting, 55, 55-69.
• Garrison, R. H., Noreen, E. W., & Brewer, P. C. (2018). Managerial Accounting. McGraw-Hill Education.
• Gibson, C. H. (2019). Financial Reporting & Analysis. Cengage Learning.
• Heising, A., & Zdanowicz, J. (2020). Cost Accounting: Foundations and Evolutions. Routledge.
• Harrison, W. T., & Horngren, C. T. (2018). Introduction to Management Accounting. Pearson.
• Kieso, D. E., Weygandt, J. J., & Warfield, T. D. (2019). Intermediate Accounting. Wiley.
• Kotler, P., & Keller, K. L. (2016). Marketing Management. Pearson Education.
• Wild, J. J., Subramanyam, K. R., & Halsey, R. F. (2018). Financial Statement Analysis. McGraw-Hill Education.
• Weygandt, J. J., Kimmel, P. D., & Kieso, D. E. (2020). Financial Accounting. Wiley.