Financial Accounting, 8th Edition
8th Edition
ISBN: 9780078025556
Author: Robert Libby, Patricia Libby, Daniel Short
Publisher: McGraw-Hill Education
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Textbook Question
Chapter 7, Problem 10MCQ
Which of the following is false regarding a perpetual inventory system?
- a. Physical counts are not needed since records are maintained on a transaction-by|-transaction basis.
- b. The balance in the inventory account is updated with each inventory purchase and sale transaction.
- c. Cost of goods sold is increased as sales are recorded.
- d. The account Purchases is not used as inventory is acquired.
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Which of the following is false regarding a perpetualinventory system?a. Physical counts are never needed because records aremaintained on a transaction-by-transaction basis.b. The Inventory records are updated with each inventorypurchase, sale, or return transaction.c. Cost of Goods Sold is increased as sales are recorded.d. A perpetual inventory system can be used to detectshrinkage
Which of the following is not an advantage of a perpetual inventory system?
a. Assists in the prevention of stockouts
b. Requires less data processing effort than periodic systems
c. Maintains up-to-date inventory and cost of goods sold balances
d. Provides evidence of inventory shrinkage
Which of the following is not an advantage of a perpetual inventory system?
a. assits in the prevention of stockouts
b. requires less data processing effort than periodic system
c. maintains up-to-date inventory and cost of goods sold balances
d. provides evidence of inventory shrinkage
Chapter 7 Solutions
Financial Accounting, 8th Edition
Ch. 7 - Why is inventory an important item to both...Ch. 7 - Prob. 2QCh. 7 - Prob. 3QCh. 7 - Prob. 4QCh. 7 - Prob. 5QCh. 7 - The chapter discussed tour inventory costing...Ch. 7 - Prob. 7QCh. 7 - Contrast the effects of LIFO versus FIFO on...Ch. 7 - Contrast the income statement effect of LIFO...Ch. 7 - Prob. 10Q
Ch. 7 - Explain briefly the application of the LCM concept...Ch. 7 - Prob. 12QCh. 7 - Consider the following information: ending...Ch. 7 - The inventory costing method selected by a company...Ch. 7 - Which of the following is not a component of the...Ch. 7 - Consider the following information: beginning...Ch. 7 - Consider the following information: beginning...Ch. 7 - An increasing inventory turnover ratio a....Ch. 7 - If the ending balance in accounts payable...Ch. 7 - Prob. 8MCQCh. 7 - Which inventory method provides a better matching...Ch. 7 - Which of the following is false regarding a...Ch. 7 - Prob. 1MECh. 7 - Recording the Cost of Purchases for a Merchandiser...Ch. 7 - Identifying the Cost of Inventories for a...Ch. 7 - Inferring Purchases Using the Cost of Goods Sold...Ch. 7 - Prob. 5MECh. 7 - Matching Inventory Costing Method Choices to...Ch. 7 - Reporting Inventory under Lower of Cost or Market...Ch. 7 - Determining the Effects of Inventory Management...Ch. 7 - Prob. 9MECh. 7 - Prob. 1ECh. 7 - Inferring Missing Amounts Based on Income...Ch. 7 - Prob. 3ECh. 7 - Inferring Merchandise Purchases Abercrombie and...Ch. 7 - Prob. 5ECh. 7 - Prob. 6ECh. 7 - Prob. 7ECh. 7 - Prob. 8ECh. 7 - Prob. 9ECh. 7 - Evaluating the Choice among Three Alternative...Ch. 7 - Prob. 11ECh. 7 - Prob. 12ECh. 7 - Prob. 13ECh. 7 - Prob. 14ECh. 7 - Prob. 15ECh. 7 - Prob. 16ECh. 7 - Prob. 17ECh. 7 - Prob. 18ECh. 7 - Prob. 19ECh. 7 - (Chapter Supplement A) Analyzing the Effects of a...Ch. 7 - (Chapter Supplement B) FIFO and LIFO Cost of Goods...Ch. 7 - Prob. 22ECh. 7 - Prob. 1PCh. 7 - Prob. 2PCh. 7 - Prob. 3PCh. 7 - Prob. 4PCh. 7 - Evaluating the LIFO and FIFO Choice When Costs Are...Ch. 7 - Prob. 6PCh. 7 - Evaluating the Effects of Manufacturing Changes on...Ch. 7 - Evaluating the Choice between LIFO and FIFO Based...Ch. 7 - Prob. 9PCh. 7 - (Chapter Supplement A) Analyzing LIFO and FIFO...Ch. 7 - Prob. 1APCh. 7 - Prob. 2APCh. 7 - Evaluating the UFO and FIFO Choice When Costs Are...Ch. 7 - Prob. 4APCh. 7 - Prob. 1CPCh. 7 - Prob. 2CPCh. 7 - Prob. 3CPCh. 7 - Prob. 4CPCh. 7 - Using Financial Reports: Interpreting Effects of...Ch. 7 - Making a Decision as a Financial Analyst: Analysis...Ch. 7 - Evaluating an Ethical Dilemma: Earnings, Inventory...Ch. 7 - Prob. 1CC
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Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Does the use of a perpetual system eliminate the need for taking a physical inventory count?arrow_forwardWhich of these statements is false? A. If cost of goods sold is incorrect, ending inventory is usually incorrect too. B. C. D.arrow_forwardErrors A company that uses the periodic inventory system makes the following errors: 1. It omits a purchase on credit from the purchases account and the ending inventory. 2. It omits a purchase on credit from the purchases account, but the ending inventory is correct. 3. It overstates the ending inventory, but purchases arc correct. Required: Indicate the effect of the preceding errors on the income statement and the balance sheet of the current and succeeding years.arrow_forward
- Which of the following is true about the Sales Returns and Allowances account? a. It is used to record the sale of merchandise. b. It is used to record the reduction of inventory. c. It is a contra account, deducted from sales. d. It is used to record discounts for prompt payment. e. None of the above.arrow_forwardOne reason for inventory is to prevent shutdowns. How does the JIT approach to inventory management deal with this potential problem?arrow_forwardHow long does it take an inventory error affecting ending inventory to correct itself in the financial statements? Explain.arrow_forward
- A company forgets to record a purchase on credit in the purchases account, but ending inventory is correct. The effect of this mistake in the current year is:arrow_forwardUnder the periodic inventory system, the merchandise inventory account is not kept up to date for purchases and sales. As a result, the inventory shrinkage cannot be directly determined. True or Falsearrow_forwardWhich of the following is incorrect about the perpetual inventory method? a. purchases are recorded as debit to inventory accountb. the entry to record a sale includes a debit to cost of goods sold and a credit to inventoryc. after a physical inventory count, inventory is credited for any missing inventory.d. purchase returns are recorded by debiting accounts payable and crediting purchase returns and allowancesarrow_forward
- When a periodic inventory system is used, a.only revenue is recorded each time a sale is made. b.only the cost of goods sold is recorded each time a sale is made. c.only the reduction of inventory is recorded each time a sale is made. d.None of these choices are correarrow_forwardWhich of the following is not a characteristic of a perpetual inventory system? O Cost of goods sold is recorded with each sale. Inventory purchases are debited to a Inventory account. O Inventory records are kept for every item. O Cost of goods sold is determined as the amount of purchases less the change in inventory.arrow_forwardUnder a perpetual inventory system, acquisition of inventory is dented to the purchases account. True or false?arrow_forward
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