Inventory measurement

Question 1

• goods controlled by a company
• can consist of virtually any tangible good

Answer 1

inventory

Question 2

buys finished goods, resells them to their customers
- targer, walmart
- inventory is what they purchase from their suppliers

Answer 2

retailer

Question 3

• inventory includes raw materials, work in process, and finished goods
• inventory would include materials plus the labor to build the product

Answer 3

manufacturer

Question 4

shipping costs to receive the item

Answer 4

freight in

Question 5

what costs get included in inventory

Answer 5

1. costs to acquire goods and prepare them for sale to the customer
2. purchase costs
3. freight in
4. sales tax
5. storage fees
6. transportation insurance

Question 6

• 2 inventory cost systems

Answer 6

1. periodic
2. perpetual

Question 7

• company only knows that balance of inventory at the end of the period
• determine the amount of inventory via physical inventory count

Answer 7

periodic

Question 8

• company always knows the amount of inventory on hand

Answer 8

perpetual

Question 9

COGS equation

Answer 9

COGS =
beginning inventory + net purchases = COGAFS - ending inventory

Question 10

apply at time of sale

Answer 10

FIFO & LIFO perpetual

Question 11

apply at the end of the month

Answer 11

FIFO & LIFO periodic