Indicate the best answer(s) for each question: Which of the following statements about perpetual merchandising activities is true? (Identify the two correct answers.)    a       As inventory is purchased, the Purchase account is Debited and |Cash (or Accounts Payable) is credited.                                  b       Inventory is recorded as an asset when it is first purchased.                       c        As inventory is sold, its cost is transferred from the balance sheet to the income                statement.                      d              As inventory is sold, its cost is transferred from the income statement to the           balance sheet

Q: Determine which of the following statements are correct regarding the difference between physical…

A: The physical flow, the physical movement of goods and services. Physical flow means flows of…

Q: Required: 1. What is the title used by Target for its balance sheets? 2. On the balance sheets, what…

A: Property plant and equipments include all fixed assets of a business, which are long term in nature.…

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: (a) Prepare the year-end adjusting entries required to adjust to the lower of cost or net realizable…

A: Direct Method :In Direct method the business will charge the inventory write-off to COGS…

Q: Which of the following are characteristics of a perpetual inventory system? (a). Management knows…

A: There were two types of inventory systems to record and maintain inventory.   1. Periodic…

Q: If a company purchases inventory on account, what type of accounts are affected? (i.e., assets.…

A: Inventory :- It is raw materials , work in progress , finished goods, which is used to produce…

Q: True or False Question 1. a) Inventory is anything purchased by a business.     b) Cost of Goods…

A: In the balance sheet of a company we can see different assets (and liabilities) of a…

Q: The Inventory account balance appearing in a perpetual inventory worksheet represents the

A: The products and materials that a company keeps on hand with the intention of reselling, producing,…

Q: Match the accounting term with its correct definition. Question 1 options: 1. contains deductions…

A: Introduction:Periodic Inventory:The periodic inventory system is based on periodic reviews and…

Q: Complete the following statement Merchandise inventory that is still available for sale is…

A: Merchandise Inventory is an asset purchased by the organization to resold to the customer after…

Q: Although merchandising transactions affect the balance sheet in reporting inventory, they primarily…

A: Solution: Merchandising transactions involves purchase and sales of goods. these transactions…

Q: Which of the following transaction is not recorded in the general journal? Select one: A. All of…

A: Correct option is A i.e.  All of the above

Q: How do retail companies correctly match expenses with revenue for the period to get an accurate net…

A: The matching principle in accounting is a fundamental principle that requires companies to report an…

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: 1, how can assets and liabilities be classified for a more informative balance sheet?

A: Introduction :- A classified balance sheet is a financial statement with classifications like…

Q: nts) Which of the following accounts should be credited each time a sale on account is made if the…

A: Perpetual inventory system: It is a method of inventory management that records real time…

Q: 2. Which financial statement would users find these inventory accounts?

A: As per the guidelines, only one question is allowed to be answered. Please upload different…

Q: Required information [The following information applies to the questions displayed below.] A company…

A: Evaluating Net Realizable Value is essential for proper financial reporting because it prevents…

Q: When recording a purchase of inventory on credit, which accounts are typically affected? A) Debit…

A: When assets or expenses increases it should be debited and when decreases it should be…

Q: 126) Using a perpetual inventory system, the sale of inventory on account is recorded with a: B)…

A: Journal Entry :— It is an act of recording transaction in books of account when transaction…

Q: Using the following letters to represent items: P = purchases (net) C = cost of good sold B =…

A: We know, Ending inventory = Begining inventory + Purchases - Cost of good sold E = B + P - C

Q: What is merchandise on hand (not sold) at the end of an accounting period? It is a/an _____________.…

A: Accounting period: Accounting period refers to a time period in which the business transactions are…

Q: comparing the accounts of a merchandising company with those of a service company, what additional…

A: Merchandise company sales goods to customers while service company provide services to customer and…

Q: erms and phrases relating to concepts discussed in this chapter along with descriptions of those…

A: Key Inventory Terms and Phrases Description of Terms and Phrases 1. Net realizable value…

Q: When sales are made with a right of return, the company_ а. should recognize revenue for the full…

A: The revenue would be posted in the income statement of the company. The expenses are deducted form…

Q: When creating financial statements, why is it essential to create the income statement before the…

A: An income statement summarizes a company's revenues and expenses over a specific period, showing its…

Q: On the work sheet, ending merchandise inventory will appear on the a. debit side of the Income…

A: Worksheet is a 10 column sheet which is used to prepare financial statements for business. It shows…

Q: What is the correct entry to write off the inventory under perpetual method? Dr. Cost of Goods sold…

A: The Perpetual Inventory System is a highly preferred system as it can produce accurate results…

Q: For each of the following items, identify whether the item is considered current or noncurrent,…

A: All of a company's assets that are expected to be sold, consumed, utilized, or expended within one…

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.