Accounting chpt 20

A form used during a physical inventory to record information about each item merchandise on hand

Inventory record

Using the price of merchandise purchased last to calculate the cost of merchandise sold first.

LIFO

in a year of falling prices, the inventory method that gives the highest possible value for ending inventory is

LIFO

Using an inventory costing method to charge costs of merchandise against current revenue is an application of the accounting concept

Matching expenses with revenue

a file of stock records for all merchandise on hand.

Stock ledger

When the FIFO method is used, cost of merchandise sold is value at

The earliest cost

Using the average cost of beginning inventory plus merchandise purchased during a fiscal period to calculate the cost of merchandise sold.

Weighted-average inventory costing method

the weighted-average method is based on the assumption that the cost of merchandise sold should be calculated using the

average price of beginning inventory plus purchased during the fiscal period

a business hat used the same inventory costing method for all fiscal periods is applying the accounting concept

consistent reporting

When the FIFO method is used, cost of merchandise sold is price at

earliest price

When the LIFO method is used, ending inventory unites are prices at the

earliest price

a perpetual inventory systems provides day-to-day information about the quality of merchandise on hand

false

the net income of a busness can be increased by mainting a merchandise inventory that is larger than needed

false

using the lower of cost of market price to calculate the cost of ending merchandise inventory

lower of cost or market

The price that must be paid to replace an asset

market value

The FIFO method is based on the assumption that the merchandise purchased first in the merchandise

sold first

The LIFO method is based on the assumption that the merchandise purchased first is the merchandise

sold last

A form used to show the kind of merchandise, quantity received, quantity sold, and balance on hand.

stock record

when the weighted-average method is used, units sold are prices at

the average price

Merchandise inventory on hand it typically the largest asset on a merchandising business

true

a merchandise inventory evaluated at the end of a fiscal period is known as a periodic inventory

true

a minimum inventory balance is the amount of merchandise that will typically last until ordered merchandise can be received from vendor

true

a periodic inventory conducted by counting, weighting, or measuring items of merchandise on hand is also called a physical inventory

true

many merchandising business use a POS terminal to read UPC codes on products and update the stock ledge

true

the gross profit method makes it possible to prepare monthly income statements without taking a phyysical inventory

true

calculating an accurate inventory cost to assure that gross profit and net income are reported correctly on the income statement is an application of the account concept

Adequate Disclosure

Using the price of merchandise purchased fire to calculate the cost of merchandise sold first.

FIFO

in a year of rising prices, the inventory method that gives the highest possible value for ending inventory is

FIFO

the first-in, first-out method is used to determine the quantity of each type of merchandise on hand

False

the only financial statement on which the vlaue of merchandise on hand is reported in the income statement

False

estimating inventory by using the previous year's percentage of gross profit on operations

Gross profit method of estimating inventory