What is the main distinction between perpetual and periodic inventory systems? Which type of system providesbetter internal control over inventory? Explain why.

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: What are the two types of inventory accounting systems? Briefly describe each.

A: Inventory Accounting Systems: Merchandise operation is an operation undertaken by the company to…

Q: Discuss some measures that should be taken to maintain control over merchandise inventory.

A:

Q: What are the different methods to estimate inventory?

A:

Q: Define inventory.

A: Inventory: Inventory consist of total of three components: raw material, work-in-process and…

Q: What is inventory turnover Ratio? Explain its significance.

A: Explain the meaning of inventory turnover ratio and its significance:Inventory turnover ratio:…

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

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

Q: In the Purchasing Process - Level 0 Diagram, a data flow called "inventory's purchase requisition"…

A: The purchasing process, also known as the procurement process, refers to the series of activities…

Q: Explain the ABC inventory management system and the just-in-time inventory managementsystem

A: The objective of this question is to understand two different inventory management systems: ABC and…

Q: How does Just-In-Time (JIT) system help minimize the inventory investment? Explain.

A: Just-In-Time (JIT) is used for that inventory which is owned by business at reduced amount on…

Q: Define each of the following terms: e. Red-line method; two-bin method; computerized inventory…

A: The red line strategy could be a strategy for stock control, as is the two-bin strategy. Within the…

Q: What is inventory conversion period?

A: Conversion period refers to the length of period at which one asset is converted into another form.…

Q: Demonstrate how the inventory cost flow assumption utilized might have an impact on liquidity…

A: Inventory cost flow assumptions refers to the way in which costs are removed from inventory and…

Q: Which of the following statements best explains the relationship between the acquisition/payment…

A: Solution Explanation - Sales collection process is a series of operating events that collectively…

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: How is Inventory audited?

A: Introduction Inventory audit is an analytical procedure that cross checks the financial records with…

Q: Explain how liquidity measures can be influenced by the inventory cost flow assumption used.

A: Inventory Cost Flow Assumptions means the different techniques of measurement of cost of inventory…

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: factors affect inventory turnover ratio

A: The inventory turnover ratio is a financial ratio. It is the rate at which a company is managing its…

Q: Why would a "Just in Time" inventory management practice be preferred over a "Just in Case inventory…

A: Just in Time Inventory Management:- It is the inventory technique where labor, material, and other…

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…

Q: Describe some inventory control systems that are used in practice

A: Inventory control system: The inventory control system can be defined as the use of a computerized…

Q: Why is it important to manage inventory?

A: Given: To manage the inventory as follows,

Q: What is the difference between a pull system and a push system of inventory control?

A: In the pull system of inventory control, releases are authorized. And, companies using this strategy…

Q: What are the two accounting systems are used to record transactions involving inventory?

A: Inventory:   Inventory refers to the raw materials, work-in process, and the finished goods…

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.