Differentiate between the record keeping required for sales and cost of goods sold under a perpetual versus a periodic inventory system.
What will be an ideal response?
Under both inventory systems, an entry is made to credit sales when a sale occurs. Both inventory systems will record the sales revenue; however, only under the perpetual system is a second entry required. The second entry debits the cost of goods sold and credits the perpetual inventory. Under the periodic system, the cost of goods sold and changes in the inventory account are determined only at the end of the period by applying the cost of goods sold model.
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Suppose you are an HR manager who is conducting orientation for a group of new hires in the accounting department. All of the new hires will be working with accounts receivable. When the orientation is complete, which three pieces of information should all of the new hires have?
What will be an ideal response?
Which of the following is not a reason that the auditor must gain an understanding of the client's internal control system?
a. Better understand the client, its risks, and how it manages those risks. b. Assess control risk and identify the types of financial statement misstatements that are most likely to occur. c. Plan direct tests of account balances to determine if misstatements have occurred. d. All are reasons why auditors must gain an understanding of the client's internal control system.
The hardball tactic called ________ occurs when negotiators overwhelm the other party with so much information that they have trouble determining which facts are real or important and which are included merely as distractions.
A. the nibble B. the bogey C. intimidation D. the snow job
Blitch Products, Inc., has a Screen Division that manufactures and sells a number of products, including a standard screen that could be used by another division in the company, the Home Security Division, in one of its products. Data concerning that screen appear below: Capacity in units 45,000Selling price to outside customers$53Variable cost per unit$26Fixed cost per unit (based on capacity)$16?The Home Security Division is currently purchasing 2,000 of these screens per year from an overseas supplier at a cost of $50 per screen.?Assume that the Screen Division has enough idle capacity to handle all of the Home Security Division's needs. Does there exist a transfer price that would make both the Screen and Home Security Division financially better off than if the Home
Security Division were to continue buying its screens from the outside supplier? A. No, the selling division's price to outside customers is higher than the price that the buying division has to pay its outside supplier. B. Yes, the minimum transfer price that the selling division should be willing to accept is less than the maximum transfer price that the buying division would accept. C. Yes, both divisions are always better off regardless of whether the selling division has enough idle capacity to handle all of the buying division's needs. D. The answer cannot be determined from the information that has been provided.