All Of The Following Are Safeguards For Inventory Except

Question: Show your understanding of the ownership of goods in transit by completing the following statement.

If goods are shipped FOB shipping point, then the ___ (purchaser/seller) is responsible for paying freight charges and the ___ (purchaser/seller) will not include the merchandise in their inventory.

Answer: Purchaser; seller

Question: Which of the costs below would be included in the recorded cost of merchandise inventory? (Check all that apply.)

Answer: Storage costs

Insurance costs

Invoice cost

Question: Which statement(s) below is(are) correct regarding the purpose of taking a physical inventory count? (Check all that apply.)

Answer: The physical count is used to adjust the Inventory account balance to the actual inventory available.

The physical count is used to determine if there has been any theft, loss, damage or errors in inventory.

Question: Recount the methods used to assign costs to inventory and cost of goods sold under both a perpetual and a periodic system. (Check all that apply.)

Answer: Last-in, first-out

Specific identification

Weighted average

First-in, first-out

Question:

Answer: The June 1 at $10 and the June 2 at $15 are both sold; the July 4 unit remains in ending inventory.

Question: Which of the following statements is correct regarding goods in transit?

Answer: Goods shipped FOB shipping point will be included in the buyer’s inventory.

Question: The _____ principle states that inventory costs are expensed as cost of goods sold when inventory is sold.

Answer: expense recognition

Question: Why would the physical count of inventory be different than what is shown in perpetual inventory records? (Check all that apply.)

Answer: Events such as theft

Events such as errors

Events such as loss

Events such as damage

Question: Which of the following lists the four methods used to assign costs to inventory and to cost of goods sold?

Answer: FIFO, LIFO, weighted average and specific Identification

Question: The FIFO cost flow assumption assumes that the cost of items purchased ___ (earliest/latest) are the costs that will be transferred first to cost of goods sold on the ___ (balance sheet/income statement).

Answer: Earliest; income statement