U2, AOS 1 - Lesson 4 - Reporting for Inventory (Pt.1)

Question 1

Sales returns are recorded on which report?

Answer 1

Income statement.

Question 2

Sales returns are recorded on the income statement as…

Answer 2

Cash Sales
Credit Sales
“Less sales returns”
Net Sales (Credit + Cash Sales - Sales Returns)

Question 3

Inventory loss is recorded on the Income Statement as…

Answer 3

Gross Profit
“Less Inventory Loss”
Adjusted Gross Profit

Question 4

Cost of Goods Sold refers to any costs in getting inventory into a…

Answer 4

Condition and location ready for sale

Question 5

Structure of the income statement (inc. COGS, GP, etc.)

Answer 5

Question 6

Formula for Gross Profit =

Answer 6

Net Sales - COGS = GP

Question 7

Formula for Adjusted Gross Profit

Answer 7

GP - Inventory Loss = Adj. GP

Question 8

Net profit formula

Answer 8

Adj. GP - Exp = NP

Question 9

Which of the following is NOT a COGS?

Cost of inventory
Modifications
Freight out
Packaging
Freight in

Answer 9

Freight Out = this is paid for by the customer and is therefore not a cost to the business.

(essentially, this is the shipping from the business to the customer)

Question 10

The information which we put into an inventory card comes from…

Answer 10

The source document.

Question 11

Inventory cards come under which section of the Accounting Process?

Answer 11

Records

Question 12

T/f - Unit cost may change on the inventory card over time.

Answer 12

True - costs of inventory will change over time for a range of reasons. E.g. rise in costs of production, change in supplier, inflation.