Cycle Counting

question 45

Multiple Choice

Cycle counting

• A) is a process by which inventory records are verified once a year
• B) provides a measure of inventory accuracy
• C) provides a measure of inventory turnover
• D) assumes that all inventory records must be verified with the same frequency
• E) assumes that the most frequently used items must be counted more frequently

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Definitions:

Cash Flows

The total amount of money being transferred into and out of a business, especially affecting liquidity.

GAAP Estimate

An accounting estimate made following Generally Accepted Accounting Principles guidelines.

Prior-Period Adjustment

Corrections made to an organisation’s financial statements for errors found in the financials of preceding periods.

Comprehensive Income

The total change in equity for a reporting period other than from transactions with owners, including all unrealized gains and losses.