Activation Exercise 7-1: Inventory Terms and Definitions Typically, a significant arrent asset for a merchandiser is The safeguarding of merchandise inventory indudes taking ain Select your answer authorizes the purchase of inventory, whie is at least once per the is Select your answer: issued when the purchase is received into merchandise Adheck is issued to vendor when there agreement between the purchase order receiving report, and vendor inventory. perpetual inventory method using a invoice. Merchandse inventory is maintained in the accounting records under the Select your answer Understanding the Business Transaction A merchandising business purchases goods for resale. A merchandiser makes a profit by selling goods a price higher the cost ofthe goods sold. While the undertying business transaction is straightforward, at than Identify cost determining of the cost of the merchandise sold often r an inventory cost now assumption when ar units are purchased at different units costs during the period. flow assumptions to their description Cost Flow Assumption Description select your a Cost flow is the reverse order in which the costs were incurred select your answer v Cost flow is the order in which the costs were incurred. Select your a Cost flow is an average of the purchase costs. Select your answer Unit cost is identified with a specific purchase often, specification identification may not be practical, so one of the other three cost fow assumptions is assumed. The cost flow assumption can be applied under either the perpetual or periodic inventory system. Recording in the Accounting System The cost of merchandise sold and merchandise inventory is determined from the inventory cost flow assumption. To ilustrate, beginning inventory, purchases and sales of shoes are shown below for Grant Co. using a perpetual inventory system In the table below, fill in the March 24 quantit, unit cost, and total cost in the spaces provided for determining cost of Merchandise sold (coMs) and Merchandse inventory under the FIFo cost flow assumption, assuming 36 shoes are sold on March 24. Determine the coMs and Merchandise inventory fnal balances. If units are in inventory or are listed under cost of merchandise sold at its that were purchased earliest first two different costs, enter the A D A a V a Activation Exercise 7-1: Inventory Terms and Definitions Typically, a significant arrent asset for a merchandiser is The safeguarding of merchandise inventory indudes taking ain Select your answer authorizes the purchase of inventory, whie is at least once per the is Select your answer: issued when the purchase is received into merchandise Adheck is issued to vendor when there agreement between the purchase order receiving report, and vendor inventory. perpetual inventory method using a invoice. Merchandse inventory is maintained in the accounting records under the Select your answer Understanding the Business Transaction A merchandising business purchases goods for resale. A merchandiser makes a profit by selling goods a price higher the cost ofthe goods sold. While the undertying business transaction is straightforward, at than Identify cost determining of the cost of the merchandise sold often r an inventory cost now assumption when ar units are purchased at different units costs during the period. flow assumptions to their description Cost Flow Assumption Description select your a Cost flow is the reverse order in which the costs were incurred select your answer v Cost flow is the order in which the costs were incurred. Select your a Cost flow is an average of the purchase costs. Select your answer Unit cost is identified with a specific purchase often, specification identification may not be practical, so one of the other three cost fow assumptions is assumed. The cost flow assumption can be applied under either the perpetual or periodic inventory system. Recording in the Accounting System The cost of merchandise sold and merchandise inventory is determined from the inventory cost flow assumption. To ilustrate, beginning inventory, purchases and sales of shoes are shown below for Grant Co. using a perpetual inventory system In the table below, fill in the March 24 quantit, unit cost, and total cost in the spaces provided for determining cost of Merchandise sold (coMs) and Merchandse inventory under the FIFo cost flow assumption, assuming 36 shoes are sold on March 24. Determine the coMs and Merchandise inventory fnal balances. If units are in inventory or are listed under cost of merchandise sold at its that were purchased earliest first two different costs, enter the A D A a V a
