A201 CH 6

Which of the following items are readily available from an inventory account under the perpetual inventory system?

-cost of units sold -ending inventory balance -individual purchases -beginning inventory balance

Because prices change over time, costs reported for these accounts tend to differ among inventory cost methods

-inventory -Cost of Goods Sold

For internal record keeping, most companies carry their inventory using the _____ basis

FIFO

inventory cost flow assumption typically approximates the actual physical flow of inventory items of most companies?

FIFO

Vogel Company maintains its inventory records using the FIFO assumption, but reports its inventory consistent with LIFO. At the end of the year, Vogel converts its inventory balance from FIFO to LIFO by using the

LIFO adjustment

The lower of cost and net realizable value method was developed to

avoid reporting inventory at an amount that exceeds the benefits it provides.

A major difference between companies that provide services and companies that manufacture or sell goods is that those that manufacture or sell goods must account for

inventory

under what inventory system does the inventory account reflects purchases during the year, as well as cost of units sold?

perpetual

The inventory turnover ratio directly measures

the times per period the average inventory balance is sold

Costs related to manufacturing products typically include

-overhead -raw materials -direct labor

3 costs related to manufacturing of products?

-raw materials -direct labor -manufacturing overhead

Inventory Turnover

cost of goods sold/average inventory

_______ _________ inventory consists of items for which the manufacturing process is complete

finished goods

Purchasing inventory on account:

increases assets increases liabilities