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BSA 12C Intermediate Accounting 1 > Chapter 10: Inventories > Flashcards

Chapter 10: Inventories Flashcards

To define Inventories. To identify the major classes of inventory To account for inventory transactions using periodic and pertual inventory system. To know the gross method and net method of recording purchases. To identify the items included in inventory cost.

1
Q

Are assets held for sale in the ordinary course of business

A

Inventories

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2
Q

Classes of inventories

A
  1. Inventories of trading Concern
  2. Inventories of manufacturing concern
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3
Q

Encompasses goods purchased and held for resale

A

Inventories

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4
Q

Is one that buys and sells goods in the same form purchased.

A

Trading concern

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5
Q

Is one that buys goods which are altered or converted into another form before they are made available for sale.

A

Manufacturing concern

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6
Q

Are completed products which are ready for sale.

A

Finished Goods

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7
Q

Are partially completed products which are require further process or work before they can be sold

A

Goods in process or work in process

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8
Q

Are goods that are to be used in the production process.

A

Raw Materials

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9
Q

Are similar to raw materials but their relationship to the end product is indirect. May be referred to as “Indirect Materials”.

A

Factory or manufacturing supplies

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10
Q

Freight charge that is paid already

A

Freight Prepaid

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11
Q

Freight charge that is not yet paid

A

Freight collect

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12
Q

T/F

A seller who ships FAS (free alongside) must bear the expenses in delivering the Goods to the dock

A

True

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13
Q

Receipt of the goods. The Seller shall be responsible for freight charges.

A

FOB destination

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14
Q

Upon shipment of the goods. The Buyer shall be responsible for freight charges.

A

FOB shipping point

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15
Q

Calls for the physical counting of goods on hand at the end of the accounting period to determine quantities.

A

Periodic System

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16
Q

3 Maritime Shipping Terms

A
  1. Free Alongside
  2. Cost, insurance and freight
  3. Ex-ship
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17
Q

(For #’s 16 - 21) - Journal Entries_Periaodic System

A
18
Q

Purchase of Merchandise on Account

A

Purchases
Accounts Payable

19
Q

Payment of freight on the purchase

A

Freight in
Cash

20
Q

Return of merchandise purchased to supplier

A

Accounts Payable
Purchase Returns

21
Q

Sale of merchandise on account

A

Accounts Receivable
Sales

22
Q

Return of merchandise sold from customer

A

Sales return
Accounts receivable

23
Q

Adjustment on ending inventory

A

Merchandise inventory-end
Income Summary

24
Q

Requires the maintenance of records called stock cards that usually offer a running summary of the inventory inflow and outflow.

A

Perpetual System

25
Q

T/F

Inventories are presented as one-line item in SFP and all the details of inventory are disclosed in the notes of financial statements.

A

True

26
Q

For #’s 27-33 - Journal Entry (Perpetual System)

A
27
Q

Adjustment of ending Inventory

A

No Entry

28
Q

Purchase of Merchandise on Account

A

Merchandise Inventory
Accounts Payable

29
Q

Payment of freight on the purchase

A

Merchandise Inventory
Cash

30
Q

Return of merchandise purchased to supplier

A

Accounts Payable
Merchanise Inventory

31
Q

Sale of merchandise on account

A

Accounts Receivable
Sales

32
Q

Return of merchandise sold from customer

A

Sales
Accounts Receivable

Merchandise Inventory
Cost of Goods Sold

33
Q

Is usually closed to COGS because this is often the result of normal shrinkage and breakage in inventory

A

Inventory shortage

34
Q

T/F

Abnormal and material shortage shall be separately classified and presented as other expenses

A

True

35
Q

T/F

Abnormal and material shortage shall be separately classified and presented as other expenses

A

True

36
Q

Are deductions from the list or catalog price in order to arrive at the invoice price which is the amount actually charged to the buyer.

A

Trade Discounts

37
Q

Are deductions from price when payment is made within the discount period.

A

Cash Deductions

38
Q

Cash discounts are recorded as ____________ by the buyer and ___________ by the seller.

A

Purchase Discount
Sales Discount

39
Q

T/F

Trade discounts are recorded

A

False

40
Q

The debit balance of Inventory is 65,000. The physical count shows an inventory of 55,000 on hand.

A

Inventory Shortage 10,000
Merchandise Inventory 10,000

41
Q

The debit balance of Inventory is 65,000. The physical count shows an inventory of 75,000 on hand.

A

Inventory Overage 10,000
Merchandise Inventory 10,000

BSA 12C Intermediate Accounting 1 (32 decks)

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