Principles of Accounting
Principles of Accounting
12th Edition
ISBN: 9781133626985
Author: Belverd E. Needles, Marian Powers, Susan V. Crosson
Publisher: Cengage Learning
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Chapter 6, Problem 1DQ
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Describe the ways by which merchandise inventory impact faithful representation and classification.

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A company can choose either perpetual or periodical inventory system for the representation and classification of merchandise inventory.

Perpetual inventory system continuously tracks the quantity and cost of inventory. But, periodical inventory system does not track the inventories continuously. 

Merchandise inventory is classified under current assets on the balance sheet and cost of goods sold (part of merchandise inventory) is reported on the income statement.              

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An internal auditor's work would most likely affect the nature, timing, and extent of an independent CPA's auditing procedures when the internal auditor's work relates to assertions about the:a. Existence of contingencies.b. Valuation of intangible assets.c. Estimated salvage values of fixed assets.d. Valuation of related party transactions.e. Completeness of accounts payable. is it a or e?
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