The primary goals of inventory managers are to maintain a sufficient quantity of inventory to meet customers' needs, ensure inventory quality meets
... [Show More] customers' expectations and company standards, and minimize the cost of acquiring and carrying inventory.
If inventory is sold with terms of FOB destination, the goods belong to the seller while in transit.
If inventory is sold with terms of FOB shipping point, the goods belong to the customer while in transit.
Manufacturers have three types of inventory, which include raw materials, work in process, and finished goods, whereas merchandisers have only raw materials inventory.
Goods on consignment are goods shipped by the owner to another company that holds the goods and sells them on behalf of the owner.
Consignment inventory is reported on the balance sheet of the company holding the inventory.
Goods placed in inventory are initially recorded at market value.
When a company sells goods, it removes their cost from the Inventory account and reports the cost on the income statement as Selling Expense
Inventory is reported on the balance sheet as a current asset.
Cost of goods sold = Beginning inventory + Purchases - Ending inventory
Ending inventory = Beginning inventory + Purchases + Cost of goods sold
Assume the periodic inventory method is used. When LIFO is used, costs are assigned to cost of goods sold using the most recent purchase at the time of the sale.
When costs per unit are increasing, the inventory costing method that results in the higher income tax expense is the FIFO method.
In each accounting period, a manager can select the inventory costing method that yields the highest net income.
A company can use different methods for inventories that differ in nature or use.
A company can use LIFO to prepare its U.S. tax return and FIFO to prepare its financial statements.
When preparing the operating activities section of the statement of cash flows using the indirect method, an increase in income taxes payable is added to net income
The receipt of dividends and interest are both reported as cash inflows from investing activities on the statement of cash flows (T/F)
The reporting of financing activities is identical wheater a company uses the indirect method or the direct method for the operating section of the statement of cash flows
A corporation charter establishes the number of shares of stock that will be issued in an initial public offering (IPO) (T/F)
extraordinary repairs, replacements, and additions are added to the appropriate asset accounts rather than being recorded as expenses (T/F)
When preparing the operating activities section of the statement of cash flows using the indirect method, Accumulated Depreciation is added to net income in the operating section. (T/F)
Major investing and financing activities that do not involve cash do not have to be reported as part of the statement of cash flows. (T/F)
Long-lived assets found on a company's balance sheet may include some assets that have no physical substance. (T/F) [Show Less]