Acct 2121 CHPT 6

Question 1

What is Determining Inventory Quantities?

Answer 1

Inventory must be counted at the end of each accounting period to check accuracy of records and determine loss/ theft!

Question 2

How to determine ownership of goods

Answer 2

Ownership must be considered when counting inventory, Determine who has legal title to goods in transit, Include in inventory if company has legal title, Apply freight/shipping concepts (FOB shipping point vs. FOB destination)

Question 3

Why Counting Inventory?

Answer 3

To ensure inventory is properly counted, companies must have a good system of internal control

Question 4

What are Internal controls?

Answer 4

are systems designed to help a company achieve reliable reporting, effective operations and compliance with laws

Question 5

What Internal controls that affect inventory?

Answer 5

Storing inventory in secure areas, using security cameras, Using technology to track inventory, Buying insurance on inventory for damage and theft