INTERMEDIATE ACCOUNTING
8th Edition
ISBN: 9780078025839
Author: J. David Spiceland
Publisher: McGraw-Hill Education
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Chapter 20, Problem 20.11BYP
To determine
Inventory error:
Inventory errors are sometimes caused by making mistake in physical count, in pricing the inventory correctly, or in recognizing the transfer of title for the goods in transit. These inventory errors affect both the income statement as well as
To Discuss: The reason behind these steps required to account for the error correction.
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Chapter 20 Solutions
INTERMEDIATE ACCOUNTING
Ch. 20 - Prob. 20.1QCh. 20 - Prob. 20.2QCh. 20 - Prob. 20.3QCh. 20 - Lynch Corporation changes from the...Ch. 20 - Prob. 20.5QCh. 20 - Most changes in accounting principles are recorded...Ch. 20 - Prob. 20.7QCh. 20 - Prob. 20.8QCh. 20 - Its not easy sometimes to distinguish between a...Ch. 20 - For financial reporting, a reporting entity can be...
Ch. 20 - Prob. 20.11QCh. 20 - Describe the process of correcting an error when...Ch. 20 - Prob. 20.13QCh. 20 - If it is discovered that an extraordinary repair...Ch. 20 - Prob. 20.15QCh. 20 - Prob. 20.16QCh. 20 - Prob. 20.17QCh. 20 - BE 20–1
Change in inventory methods
LO20–2
In...Ch. 20 - Prob. 20.2BECh. 20 - Prob. 20.3BECh. 20 - Prob. 20.4BECh. 20 - Prob. 20.5BECh. 20 - Prob. 20.6BECh. 20 - Prob. 20.7BECh. 20 - Prob. 20.8BECh. 20 - Prob. 20.9BECh. 20 - Prob. 20.10BECh. 20 - Prob. 20.11BECh. 20 - Prob. 20.12BECh. 20 - Prob. 20.1ECh. 20 - Prob. 20.2ECh. 20 - Prob. 20.3ECh. 20 - Prob. 20.4ECh. 20 - Prob. 20.5ECh. 20 - FASB codification research LO202 Access the FASB...Ch. 20 - Prob. 20.7ECh. 20 - Prob. 20.8ECh. 20 - Prob. 20.9ECh. 20 - Prob. 20.10ECh. 20 - Prob. 20.11ECh. 20 - Prob. 20.12ECh. 20 - Prob. 20.13ECh. 20 - Prob. 20.14ECh. 20 - Prob. 20.15ECh. 20 - Prob. 20.16ECh. 20 - Prob. 20.17ECh. 20 - Classifying accounting changes LO201 through...Ch. 20 - Prob. 20.19ECh. 20 - Prob. 20.20ECh. 20 - Prob. 20.21ECh. 20 - Prob. 20.22ECh. 20 - Prob. 20.23ECh. 20 - Prob. 20.24ECh. 20 - Classifying accounting changes and errors LO201...Ch. 20 - Prob. 1CPACh. 20 - Prob. 2CPACh. 20 - Prob. 3CPACh. 20 - Prob. 4CPACh. 20 - Prob. 5CPACh. 20 - Prob. 6CPACh. 20 - Prob. 7CPACh. 20 - Prob. 8CPACh. 20 - Prob. 9CPACh. 20 - Prob. 10CPACh. 20 - Prob. 11CPACh. 20 - Prob. 12CPACh. 20 - Prob. 13CPACh. 20 - Prob. 14CPACh. 20 - Prob. 15CPACh. 20 - Prob. 1CMACh. 20 - Prob. 2CMACh. 20 - Prob. 3CMACh. 20 - Prob. 20.1PCh. 20 - Prob. 20.2PCh. 20 - Prob. 20.3PCh. 20 - Prob. 20.4PCh. 20 - Prob. 20.5PCh. 20 - Prob. 20.6PCh. 20 - Prob. 20.7PCh. 20 - Prob. 20.8PCh. 20 - Prob. 20.9PCh. 20 - Prob. 20.10PCh. 20 - Prob. 20.11PCh. 20 - Prob. 20.12PCh. 20 - Prob. 20.13PCh. 20 - Prob. 20.14PCh. 20 - Prob. 20.15PCh. 20 - Prob. 20.16PCh. 20 - Prob. 20.17PCh. 20 - Prob. 20.1BYPCh. 20 - Prob. 20.2BYPCh. 20 - Prob. 20.3BYPCh. 20 - Prob. 20.4BYPCh. 20 - Prob. 20.5BYPCh. 20 - Prob. 20.6BYPCh. 20 - Analytic Case 20–8
Various changes
LO20–1 through...Ch. 20 - Prob. 20.9BYPCh. 20 - Prob. 20.10BYPCh. 20 - Prob. 20.11BYPCh. 20 - Prob. 20.12BYP
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- Question 15 Samwer Although purchase ordersare attached to purchase requisitions in the stores department, theres no indication ihat any comparison is made of the two aocuments for checking quantities and specifications. Which transaccion-related audir objective has not been met? DA. Accuracy OB. Compluteness OC. Occurrence OD Timingarrow_forwardQuestion 63 Modified True or False T means Correct and F means Wrong I. The longer its customers normally hold inventory, the longer the credit period supplier firms normally offer. Still, suppliers have some flexibility in the credit terms they offer. If a supplier lengthens the credit period offered, this will shorten the customer's cash conversion cycle but lengthen the supplier firm's own CCC. II. The cash conversion cycle (CCC) combines three factors: The inventory conversion period, the receivables collection period, and the payables deferral period, and its purpose is to show how long a firm must finance its working capital. Other things held constant, the shorter the CCC, the more effective the firm's working capital management. III. The target cash balance is typically (and logically) set so that it does not need to be adjusted for either seasonal patterns or unanticipated random fluctuations. IV. A firm's peak borrowing needs will probably be overstated if it bases its…arrow_forwardquestion 40arrow_forward
- H6. Lower of cost or market is an attribute used for the: a. initial measurement of accounts receivable b. subsequent measurement of inventory c. subsequent measurement of accounts receivable d. initial measurement of inventory Explain All wrong options and explain with full detailsarrow_forward[17] Monetary-unit sampling (MUS) can be used to project the A. Monetary amount of error in a balance sheet account category. B. Number of understatement errors in the perpetual inventory account. C. Percentage of invoices on which early payment discounts were not taken. D. Error rate associated with the extension of overtime payment transactions.arrow_forwardProblem 11-25 Multiple choice (IAA) 1. IFRS prohibits which cost flow assumption? a. LIFO b. Specific identification 6. Weighted average i Any of these cost flow assumptions is allowed с. , What is the inventory pricing procedure in which the oldest costs rarely have an effect on the ending inventory? a. FIFO b. LIFO c. Specific identification d. Weighted average 3. In a period of falling prices which inventory method generally provides the lowest amount of ending inventory? a. Weighted average b. FIFO c. Moving average d. Specific identification 4. Which inventory cost flow assumption would consistently result in the highest income in a period of rising prices or inflation? a. FIFO b. LIFO c. Weighted average d. Specific identification 3. The costing of inventory must be deferred until the end of reporting period under which of the following method of inventory valuation? a. Moving average b. Weighted average c. LIFÓ perpetual d. FIFO perpetualarrow_forward
- Q.8arrow_forwardPARRISH MODULE 5 INVENTORY-DIFFERENCES Please explain the differences between the following transactions. Both involve reduction in price of imperfect inventory but different accounts are used. In Transaction 2 the Periodic and Perpetual Method accounts used are exactly the same. Would you please explain, point out the differences and why they are recorded differently. Transaction 1. Reduction in price of imperfect inventory for $10 Periodic Method Accounts Payable or Cash 10 Purchase Allowances 10 Perpetual Method Accounts Payable or Cash 10 Inventory 10 Transaction 2. Reduction in price of imperfect items sold for $53; reduction allowed is $25 Periodic Method Sales Allowances 25 Accounts Payable or Cash 25 Perpetual Method Sales Allowances 25 Accounts Payable or Cash 25arrow_forwardProblem 10-34 Multiple choice (IAA) 2. Which is a characteristic of a perpetual inventory system? d. Inventory does not affect net income b. Inventory records are not kept for every item. To determine cost of goods sold Inventory purchases are debited to a purchases account. To determine merchandise returns d. Goods available for sale minus cost of goods sold Why is inventory included in the computation of net income? 1. а. To determine sales revenue b. C. Inventory purchases are debited to a purchases account. a. с. Cost of goods sold is recorded with each sale. : Cost, of goods sold is determined as the amount of purchases less the change in inventory. , Which is incorrect about the perpetual inventory method? . Purchases are recorded as debit to the inventory account. b. The entry to record a sale includes a debit to cost of goods sold and a credit to inventory. c. After a physical inventory count, inventory is credited for any missing inventory. d. Purchase returns are recorded by…arrow_forward
- Some inventory errors are said to be “self-correcting,” in that the error has the opposite financial statement effectin the period following the error, thereby “correcting,” the original account balance errors.Required:Despite this self-correcting feature, discuss why these errors should not be ignored and describe the steps requiredto account for the error correction.arrow_forwardExplain Potential Misstatements- Inventory/ Cost of Goods Sold and the description of misstatements and their examples. The misstatements of inventory cost, misstatements of inventory quantities and Early(Late) recognition of purchases - “cutoff problems”arrow_forwardWhen does an inventory error cancel out, and why?arrow_forward
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