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Description: (True or False) Cost of sales, under the periodic system, is calculated as inventory at start (plus purchases less purchases returns) less inventory at end.

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Accounting

(True or False) Cost of sales, under the periodic system, is calculated as inventory at start (plus purchases less purchases returns) less inventory at end.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

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.

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(True or False) Cost of sales, under the periodic system, is calculated as inventory at start (plus purchases less purchases returns) less inventory at end.

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How are errors in inventory between physical counts and the perpetual impact the income statement? O O O O A. An inventory shortage in Inventory reduces cost of goods sold. B. A shortage in physical counts reduces current assets. C. A shortage in Inventory increases the cost of goods sold. D. A shortage in inventory increases net income.
Which of the following is a true statement about inventory systems? A perpetual system determines cost of goods sold only at the end of the accounting period. Periodic inventory systems require more detailed inventory records. A periodic system requires cost of goods sold be determined after each sale. Perpetual inventory systems require more detailed inventory records.
When a company that uses the periodic inventory system wants to remove beginning estimated returns inventory, which of the following accounts is debited? a.Estimated Returns Inventory b.Cost of Goods Sold c.Customer Refunds Payable d.Income Summary
In a periodic inventory system, cost of goods sold is not recorded as each sale occurs. Group startsTrue or False
Assuming no beginning inventory, what can be said about the trend ofinventory prices if cost of goods sold computed when inventory is valuedusing the FIFO method exceeds cost of goods sold when inventory isvalued using the LIFO method? a. Prices decreased.b. Prices remained unchanged.c. Prices increased.d. Price trend cannot be determined from information given.
The answer is d, ex In a period of rising prices, the inventory method which tends to report the lowest inventory is a. FIFO. b. LISH. c. Specific identification. d. Average - cost.
H7. For the same transactions, why does the weighted-average cost method provide different value for ending inventory and COGS depending on whether the periodic or perpetual inventory system is used? Select one: a. Perpetual inventory calculates and assigns costs as items are sold, while periodic inventory calculates and assigns costs at the end of the period. b. Perpetual inventory calculates and assigns costs at the end of the period, while periodic inventory calculates and assigns costs as items are sold. c. Perpetual inventory counts all the purchases for the month first before calculating the average cost, while periodic calculates the average cost after every transaction. d. Perpetual inventory and periodic inventory will not provide different values using Explain also wrong options and explain with details
Which cost flow assumption generally results in the highest reported amount for ending inventory when inventory costs are rising? Explain.
When inventory is sold on account, which of the following is true? Operating cash flows are increased at the time of sale. Total assets are increased by the amount of the gross profit. Net income is increased by the amount of the sales price. Revenue is not increased until the cash is received. Both net income and liabilities are increased by the amount of the sales price.
Under the perpetual inventory method, what account is credited when adjusting for the estimated cost of the merchandise sold this period, but expected to be returned next period?
In determining inventory's lower of cost or net realizable value, NRV is defined as: O Selling Cost O replacement cost Osales price less selling costs Sales Price