Define the term inventory shrinkage. How is the amount of inventory shrinkage determined in a business using a per-petual inventory system, and how is this shrinkage recorded in the accounting records?

Q: What is the main difference between a perpetual inventory system and a periodic inventory system?…

A: Inventory can be valued under two methods. 1. perpetual inventory method 2. Periodic inventory…

Q: When using a perpetual inventory system and the weighted-average inventory costing method, when does…

A: Perpetual inventory system: The method or system of maintaining, recording, and adjusting the…

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 the two methods of inventory tracking: inventory turnover ratio and number of days' sales in…

A:

Q: What is the main source of income for a buying and selling company? 2. Between the operational cycle…

A: “Since you have posted a question with multiple sub-parts, we will solve first three sub-parts for…

Q: Identify whether each description best applies to a periodic or a perpetual inventory system.…

A: Perpetual inventory system: Perpetual Inventory System refers to the inventory system that maintains…

Q: the inventory system employing accounting records that continuously disclose the amount of inventory…

A: For the purpose of cost accounting in business, records are being kept for each and every category…

Q: How do we record and report inventory shrinkage? Which accounts are affected?

A: Inventory Shrinkage:-When inventory has become less than the actual inventory recorded is known as…

Q: Which function or department below records the decrease in inventory due to a sale? a. warehouse b.…

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

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: The Rider Company uses the gross profit method to estimate ending inventory and cost of goods sold.…

A: In order to accurately estimate the ending inventory under the gross profit method, the cost…

Q: Maxell Company uses the FIFO method to assign costs to inventory and cost of goods sold. The company…

A: Periodic inventory is a system of inventory valuation where the business’s inventory and cost of…

Q: Using a perpetual inventory system, the sale of inventory on account would be recorded as a. Debit…

A: Perpetual inventory system: The method or system of maintaining, recording, and adjusting the…

Q: How does a company that uses a perpetual inventory system determine the amount of inventory…

A:

Q: Using a perpetual inventory system, the purchase of inventory on account would be recorded as a.…

A: Under perpetual inventory system, when inventory are purchased on account, then purchases account is…

Q: At what amount will the inventory and cost of goods sold amounts be reported on the financial…

A: As per the accounting standards, the closing inventory must be reported at lower of cost or net…

Q: Which of the following is not a characteristic of a perpetual inventory system? O Cost of goods sold…

A: Here in this question we are required to answer which of the characteristics is not of perpetual…

Q: How can we prepare financial statements for a company using periodic inventory system?

A: To calculate or account inventory there is two method, perpetual and periodic inventory method. In…

Q: Planning and regulating inventory use and their associated expenses is the focus of a substantial…

A: When a wholesaler or trader buys items from manufacturers or wholesalers and resells them, this is…

Q: What is a perpetual inventory system? What kind of businesses use perpetual inventory systems?

A: There are two types of inventory methods that are perpetual and periodic.

Q: Why would a company choose to use an inventory costing method that estimates the cost of the goods…

A: In this question, we  explain that why would a company choose to use an inventory costing method…

Q: Under the perpetual inventory system, in addition to making the entry to record a sale, a company…

A: Under perpetual inventory system, the decrease in inventory is also recorded every time of sale.

Q: Which of the following methods of inventory control will be used in case of a business whose…

A: Tracking down of every single item of inventory individually from the time it enters in production…

Q: Which of the following measures the length of time it takes to acquire, sell, and replace inventory?…

A: Numbers of days to sell inventory: This ratio is determined as the number of days a particular…

Q: Consider each of the following independent situations. Should a company report the goods in its…

A: If the seller expects a sales return, then it should debit sales return and credit refund liability…

Q: • Explain why there isn't there a "Cost of merchandise sold" expense for a service business.…

A: We’ll answer the first question since the exact one wasn’t specified. Please submit a new question…

Q: Inventory taken by the owner of the entity for personal use, will affect which of the following…

A: Periodic inventory system is the system of accounting in which inventory is calculated at the end of…

Q: ic inventory system wants to remove beginning estimated returns inventory, which of the following…

A: The right answer is option a.Estimated Returns 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: How does the inventory method chosen can have a significant effect on the amount of income reported…

A: Inventory is an important asset for the business. And its accounting has two methods of inventory…

Q: what are the effects of inventory errors on the financial statements

A: Incorrect recording of Inventory balance results in the Inventory errors.

Q: Which of the following is used to analyze the efficiency and effectiveness of inventory management?…

A: Formulas:  Inventory turnover ratio = Cost of goods sold / Average inventory Days' sales in…

Q: Compute for the cost of ending inventory and cost of goods sold under Moving average (Perpetual…

A: Moving average method of inventory valuation says that cost or value of inventory changes after each…

Q: A company experiences inventory shrinkage and records the proper entry to account for it. As a…

A: Inventory shrinkage: Any errors or losses of merchandise due to breakage, theft or spoilage are…

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: Explain the gross profit method of estimating ending inventory.

A: Gross Profit: It refers to the difference between the sales and the cost of goods sold.

Q: The primary objective of inventory accounting is to a. Determine the peso amount at which inventory…

A: The accounting for inventory is something which is done with regard to maintenance or reporting of…

Q: Under what circumstances do generally accepted accounting principles permit the use of an inventory…

A: Solution-   688-8-3DQ SA -3946 SR- 2606     Generally accepted accounting principles allow the…

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.