which it 8·Feine Co. accepted delivery of merchandise w purchased on account. As
ID: 2580821 • Letter: W
Question
which it 8·Feine Co. accepted delivery of merchandise w purchased on account. As of December 31, Feine ha recorded the transaction, but did not include the m in its inventory. The effect of this on its financial statements for December 31 would be A) net income, current assets, and retained earnings were B) net income was correct and current assets were C) net income was understated and current liabilities were D) net income was overstated and current assets were understated understated overstated understated 9. Which of the following is a period cost? A) Direct costs. B) Freight in. C) Production costs. D) Selling costs. 10. An inventory pricing procedure in which the oldest costs incurred rarely have an effect on the ending inventory valuation is A) FIFCO B) LIFO. C) base stock. D) weighted-average Page 3Explanation / Answer
8 a)
The transaction HAD NOT BEEN INCLUDED IN INVENTORY : thus the closing stock is understated so Income is understated, also current assets because Inventory not taken also retained earnings
9 d) only selling & admin costs are period costs . the rest are taken in invemtory and carried forward
10 b) In LIFO the latest moves out first so old ones are not affected
11 b)
At a time costs are rising the last ones have the higher price so when the old ones which have a lower cost move ot the last ones will be shown in closing inventory so will show high profit
12 d)
In company store thus In hand physically is $780,000
In transit - not with customer but still belonging to seller so add $ 60,000
Goods on consignment belongs to company even though physically in someother loction: $ 90000
TOTAL $ $930,000
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