Module 10 Assessments

What is the proper accounting for the inbound inventory shipping costs called "freight in"?

Add to Inventory Cost

Alliah Company is purchasing a large inventory of tutus for their line of dance wear. If the tutus are sold and shipped with FOB shipping point shipping terms, when does ownership of the goods transfer from the seller to Atliah Company?

At the point of shipping; thus, the goods belong to Alliah while in transit

Freedom Rock Bicycles purchased inventory on account. The inventory inspector at Freedom Rock Bicycles did not approve of the quality of the inventory, and so returned it. Of course, Freedom Rock Bicycles now does not have to pay for the inventory. Assuming that Freedom Rock Bicycles uses a periodic inventory system, which debit or credit is included in the journal entry necessary to record the return of this inventory?

Credit to Purchase Returns

Ridgeland Company uses a periodic inventory system. The company recently purchased inventory and the shipping costs were not included in the cost of inventory, so Ridgeland has to pay the shipping costs separately in cash. Which debit or credit is included in the journal entry necessary to record the cash payment of these shipping costs?

Debit to Freight In

Merrilton Company purchased inventory on account and uses a perpetual inventory system. Which debit or credit is included in the journal entry necessary to record the purchase of inventory on account?

Debit to Inventory

Endothon Company purchased inventory on account and uses a periodic inventory system. Which debit or credit is included in the journal entry necessary to record the?

Debit to Purchases

Which three types of inventory are held in a manufacturing business?

Raw materials, work-in-process, and finished goods

Paradigm Toys purchased inventory and paid early. What is the proper accounting for the purchase discount?

Subtract from Inventory Cost

Oliver Costa owns a small business where he internally develops, manufactures, and sells decorative figurines directly to customers. To create his figurines, he owns assets including tools, machines, raw materials used to produce the figurines, and a large stock of the completed figurines themselves. As Costa prepares his balance sheet for the first time, he must classify his assets into their various appropriate categories. Which of Costa's assets is classified as inventory on the balance sheet?

The raw materials and the completed figurines

Which item is considered inventory for a supermarket?

Which item is considered inventory for a supermarket?

What is inventory?

Goods manufactured or purchased and held for sale in the normal course of business

If goods are sold and shipped with FOB destination shipping terms, when does ownership transfer from the seller to the buyer?

If goods are sold and shipped with FOB destination shipping terms, when does ownership transfer from the seller to the buyer?