Home Business Accounting Valuation Inventories Define “cost” as applied to the valuation of inventories.
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At the balance sheet date Clarkson Company held title to goods in transit amounting to $214,000. This amount was omitted from the purchases figure for the year and also from the ending inventory. What is the effect of this omission on the net income for the year as calculated when the books are closed? What is the effect on the company financial position as shown in its balance sheet? Is materialist a factor in determining whether an adjustment for this item should be made?
Where, if at all, should the following items be classified on a balance sheet?
(a) Goods out on approval to customers. (b) Goods in transit that were recently purchased f.o.b. destination. (c) Land held by a realty firm for sale. (d) Raw materials. (e) Goods received on consignment. (f) Manufacturing supplies. What is a product financing arrangement? How should product financing arrangements be reported in the financial statements?
What is the difference between a perpetual inventory and a physical inventory? If a company maintains a perpetual inventory, should its physical inventory at any date be equal to the amount indicated by the perpetual inventory records? Why?
Why inventories should be included in
(a) A statement of financial position and (b) The computation of net income? |
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May 2021
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