Concept explainers
Inventory:
Inventory refers to the stock or goods which will be sold in the near future and thus is an asset for the company. It comprises of the raw materials which are yet to be processed, the stock which is still going through the process of production and it also includes completed products that are ready for sale. Thus inventory is the biggest and the important source of income and profit for the business.
Perpetual Inventory System:
In perpetual inventory system, there is a continuous recording of transactions as and when they take place that is purchase and sale transactions are recorded whenever they occur.
First in First out:
In case of First in, first out method, also known as FIFO method, the inventory which was bought first will also be the first one to be taken out.
Cost of ending inventory under the perpetual inventory system on the basis of the FIFO method.

Want to see the full answer?
Check out a sample textbook solution
Chapter 5 Solutions
FINANCIAL AND MANAGERIAL ACCOUNTING
- K&I Corp. has current liabilities of$445,000, a quick ratio of 0.82, an inventory turnover of 5.8, and a current ratio of 1.9. What is the cost of goods sold for the company? Please provide answer to this accounting problem.arrow_forwardAccounting problemarrow_forwardJasper Co. sold $15,000 worth of inventory that had a cost of $10,000. The freight terms for the sale were FOB destination, and payment terms were 2/10, n/30. Jasper records sales transactions at the gross amount. Jasper paid $500 in freight costs in cash. The receivable was collected within the discount period. Based on this information alone, what is the amount of gross margin? a) $4,400 b) $4,500 c) $4,700 d) $5,000arrow_forward
- accountingarrow_forwardWhat is the annual net cash flow for this accounting question?arrow_forwardOmega Manufacturing reported its net income as $500,000 last year. A review of its income statement shows that: Operating expenses (excluding depreciation and amortization) were $1,200,000 Depreciation and amortization expense was $250,000 Tax rate: 30% The firm has no debt (financed with stock only). a. What were Omega's sales revenues last year? b. What was Omega's net cash flow last year? c. What was Omega's operating cash flow last year?arrow_forward
- AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
- Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSONIntermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill EducationFinancial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education





