Accounting Information Systems
Accounting Information Systems
11th Edition
ISBN: 9781337552127
Author: Ulric J. Gelinas, Richard B. Dull, Patrick Wheeler, Mary Callahan Hill
Publisher: Cengage Learning
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Chapter 15, Problem 10DQ

A main goal of JIT is zero inventories.

  1. a. Assume your company does not aspire to JIT and has $3,000,000 in raw materials in stock. Identify costs that may be incurred to maintain the inventory level.
  2. b. Now assume that you implement JIT, and your raw materials in stock drop to zero. Explain how you expect this change to impact your income statement and balance sheet.
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The management of Milque Corp. is considering the effects of inventory-costing methods on its financial statements and its income tax expense. Assuming that the cost the company pays for inventory is increasing, which method will: (a) (b) (c) Provide the highest net income? Provide the highest ending inventory? Result in the lowest income tax expense? 10
) Why might a company estimate ending inventory instead of performing a physical count? O The mathematical estimates can determine if inventory has been lost. O The mathematical estimates are more accurate than 'doing inventory. O The mathematical estimates take less time and are all acceptable under GAAP. The mathematical estimates result in greater job security for accounting staff. ?)
When a company's days of inventory on hand are increasing, this might indicate that: O The company is overstating inventory to reduce profits. O The company is expanding. O The company's inventory is obsolete.
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