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Questions and Answers
In a consignment shipment, who acts as an agent in selling the consigned goods?
In a consignment shipment, who acts as an agent in selling the consigned goods?
- Supplier
- Purchaser
- Common carrier
- Consignor (correct)
When does title pass to the buyer in a shipment with f.o.b. destination?
When does title pass to the buyer in a shipment with f.o.b. destination?
- When the goods reach the fiscal period end
- When goods are delivered to the common carrier
- When the goods are shipped by the supplier
- When the goods are received by the buyer (correct)
How should a buyer record inventories in a shipment with f.o.b. destination if they have not arrived at the end of a fiscal period?
How should a buyer record inventories in a shipment with f.o.b. destination if they have not arrived at the end of a fiscal period?
- Do not record them until they arrive
- Record them immediately upon shipment
- Never record them in the buyer's book (correct)
- Record them only after title passes to the buyer
What happens to goods out on consignment in terms of ownership?
What happens to goods out on consignment in terms of ownership?
Which party is obligated to exercise due care and reasonable protection for goods received on consignment?
Which party is obligated to exercise due care and reasonable protection for goods received on consignment?
How does a consignee treat revenue from selling consigned goods?
How does a consignee treat revenue from selling consigned goods?
According to the FIFO method, how does a company use goods?
According to the FIFO method, how does a company use goods?
How does FIFO determine the cost of the ending inventory?
How does FIFO determine the cost of the ending inventory?
What is one of the objectives of using the FIFO method?
What is one of the objectives of using the FIFO method?
Why is the cost of goods sold the same at the end of the month with FIFO?
Why is the cost of goods sold the same at the end of the month with FIFO?
How does FIFO approximate specific identification?
How does FIFO approximate specific identification?
In what order are goods assumed to be used or sold according to FIFO?
In what order are goods assumed to be used or sold according to FIFO?
Why do companies usually expense interest costs associated with getting inventories ready for sale?
Why do companies usually expense interest costs associated with getting inventories ready for sale?
Why did the IASB rule that companies should capitalize interest costs related to assets constructed for internal use or discrete projects?
Why did the IASB rule that companies should capitalize interest costs related to assets constructed for internal use or discrete projects?
How does the perpetual inventory system differ from the periodic inventory system?
How does the perpetual inventory system differ from the periodic inventory system?
Why might companies using the periodic inventory system face challenges in valuing ending inventories and determining cost of goods sold?
Why might companies using the periodic inventory system face challenges in valuing ending inventories and determining cost of goods sold?
What is the rationale behind companies recording abnormal freight, handling costs, and spoilage as period costs instead of inventory costs?
What is the rationale behind companies recording abnormal freight, handling costs, and spoilage as period costs instead of inventory costs?
Why is a specific identification approach considered optimal when determining cost price for ending inventories?
Why is a specific identification approach considered optimal when determining cost price for ending inventories?
What is the total net realizable value of frozen items for ABC Foods?
What is the total net realizable value of frozen items for ABC Foods?
Why does the total net realizable value increase from birr 384,000 to birr 394,000 when applying the LCNRV rule to major groups at ABC Foods?
Why does the total net realizable value increase from birr 384,000 to birr 394,000 when applying the LCNRV rule to major groups at ABC Foods?
Which approach totally offsets the high net realizable value for spinach at ABC Foods?
Which approach totally offsets the high net realizable value for spinach at ABC Foods?
What costs are included in product cost?
What costs are included in product cost?
How does the company avoid reporting a loss in the income statement when using the cost-of-goods-sold method?
How does the company avoid reporting a loss in the income statement when using the cost-of-goods-sold method?
Which of the following is considered part of conversion costs for a manufacturing company?
Which of the following is considered part of conversion costs for a manufacturing company?
What is debited when using the cost-of-goods-sold method to write down inventory to net realizable value at ABC Foods?
What is debited when using the cost-of-goods-sold method to write down inventory to net realizable value at ABC Foods?
Why are period costs like selling expenses and general administrative expenses not included in inventory cost?
Why are period costs like selling expenses and general administrative expenses not included in inventory cost?
Which method partially offsets a high net realizable value for spinach by including similar or related items at ABC Foods?
Which method partially offsets a high net realizable value for spinach by including similar or related items at ABC Foods?
Which of the following is NOT a component of manufacturing overhead costs?
Which of the following is NOT a component of manufacturing overhead costs?
What does the Cost of Purchase include?
What does the Cost of Purchase include?
Why are interest costs and general administrative expenses considered period costs?
Why are interest costs and general administrative expenses considered period costs?
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