introduction chapters
chapter 8
Inventory
goals discussion goals achievement fill in the blanks multiple choice problems check list and key terms
1. For a manufacturer, inventories can be divided into categories such as , , and .
2. Legal ownership of inventory is dependent on freight terms, namely F.O.B. and F.O.B. .
3. The is the legal owner of goods on consignment.
4. The process of counting an inventory is called taking a .
5. plus equals , which can be divided into for reporting on the income statement and for reporting on the balance sheet.
6. The method requires a business to identify each unit of merchandise with the unit's cost, and retain that identification until the inventory is sold.
7. Under the inventory method, the most recent costs incurred are assigned to cost of goods sold on the income statement.
8. The inventory method would cause income to be the highest during a period of rising prices.
9. requires that accounting and valuation methods be used on a regular basis from year to year.
10. The perpetual inventory system can be executed under the method, method, or method.
11. Under the perpetual system, when inventory is sold, the account is debited and is credited. The account, which is used with a periodic system, is not used with the perpetual system.
12. Under the lower-of-cost-or-market method, market is defined as not to exceed nor to be less than minus a .
13. The method estimates inventory on the basis of a company's gross profit rate.
14. The is widely used by merchandising firms to value or estimate ending inventory.
15. Understating beginning inventory would cause income for that year to be .