Describe Change in Inventory Method and Inventory Errors.

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: Differentiate between periodic and perpetual inventory system with the help of an example.

A: The monetary amount associated with the goods in inventory at the end of an accounting period is…

Q: your own words, what are the primary differences between impact analysis and inventory analysis?

A: The inventory analysis an important part of decision making because it is associated with many…

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: If inventory errors are said to correct themselves, why are accounting users concerned when such…

A:

Q: What are the differences between Consignment and vendor managed inventory? Your response should…

A: VENDOR MANAGEMENT INVENTORY                                CONSIGNMENT 1. Here supplier is…

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: Describe costing inventory using weighted average. Address the different treatment, if any, that…

A: Weighted average cost method of inventory valuation is one of the 3 methods of accounting inventory.…

Q: Define Periodic inventory system.

A: Periodic inventory is a system of inventory in which updates are made on a periodic basis. This…

Q: When computing ending inventory, what is the difference between a LIFO computation and a FIFO…

A: In a LIFO computation, the most recent inventory purchases are assumed to be sold first, and the…

Q: What is meant by the term gross margin? Describe costing inventory using first-in, first-out.…

A: What is meant by the term gross margin?

Q: What is the main distinction between perpetual and periodic inventory systems? Which type of system…

A: Explain the main distinction between perpetual inventory system and periodic inventory system and to…

Q: Describe the differences between an inventory system that uses a set quantity (Q)  and one that uses…

A: In a set quantity inventory system the lot size and the order quantity is fixed, while in a fixed…

Q: The FIFO method separates work done on beginning inventory in the previous period from work done on…

A: In process costing there is two methods to treat beginning work-in-process inventory. In weighted…

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 are the key factors that can lead to an under/overstatement of the inventory balance?

A: Answer: Inventory balances are sometimes overstated and sometimes understated.

Q: According to the Conceptual Framework, physical count of inventory is an example of

A: A physical inventory count is an approach where company's staff is involved in counting company's…

Q: Which of the following would cause periodic ending inventory to be overstated?

A: Note - the answer has been provided on the basis of information available in question. If any…

Q: Highlight the differences in the closing process when using the periodic inventory system rather…

A: Definition:

Q: What analytical procedures might reveal obsolete or slow-moving inventory?

A:

Q: Describe the effects of misstatement of ending inventory.

A:

Q: Why is inherent risk for the existence of inventory an issue in the expenditure cycle audit?

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 factors contribute to (or cause) inventory shrinkage?

A: Shrinkage: The cost of the difference between the recorded inventory value and physical count of…

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…

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.