ACC 300 Chapter 8

Question 1

Inventory classification

Answer 1

The most significant asset; asset items held for sale in the ordinary cost of business or goods that will be used or consumed in the production of good to be sold

Question 2

Manufacturing company inventory

Answer 2

Separated into raw materials, work in process and finished goods

Question 3

Perpetual inventory

Answer 3

Continual tracking, recorded directly in the inventory account

Question 4

Periodic inventory

Answer 4

Cost of purchases goes into purchases account. Phsyically count at the end of the period

Question 5

COGS calculation

Answer 5

BI+PURH=GAFS-COGS=EI

Question 6

Consigned goods

Answer 6

Remain the property of the consignor

Question 7

Special sales agreement

Answer 7

Involve the transfer of legal title that is not accompanied by control of the inventory

Question 8

Sales with repurchase agreement

Answer 8

Should remain on the sellers books. No sale should be recorded. Parking transaction

Question 9

Product cost

Answer 9

Recorded in the inventory account. Cost directly connected with bringing goods to the buyers place of business and converting them to sell

Question 10

Period costs

Answer 10

Expensed when incurred. SGA

Question 11

Manufacturing costs

Answer 11

DM, DL, MOH

Question 12

Interest costs

Answer 12

Expensed as incurred except cost related to construction of discrete projects then capitalize interest

Question 13

Specific identification

Answer 13

Matches actual costs against revenue but offers opportunity to manipulate income