Inventory costing

Question 1

DETERMINING INVENTORY QUANTITIES

Answer 1

• All companies count their inventory at least once a year

Question 2

The determination of inventory quantities involves

Answer 2

• Taking a physical inventory of goods on hand
• Determining the ownership of the goods

Question 3

Taking physical inventory
Involves

Answer 3

• counting, weighing, or measuring each kind of inventory on hand
• Each count lists the quantity of each inventory on inventory summary sheets
• The quantity of each good is then multiplied by its unit cost to determine the total cost of the inventory

Question 4

DETERMINING OWNERSHIP

Answer 4

Only include inventory owned by company

Question 5

Goods in Transit:

Answer 5

• On board a public carrier (railway, airline, truck, ship) as at the count date
  -Should be included in the inventory of the company that has ownership (legal title) of them goods

Question 6

Consigned Goods:

Answer 6

• the holder of the goods (called the consignee) does not own the goods.
• Ownership remains with the shipper of the goods (consignor) until the goods are actually sold to a customer
• Owned by a consignor; do not count in our (consignee) inventory