The Physical Count of Inventory of a Retailer Was Higher

question 39

Multiple Choice

The physical count of inventory of a retailer was higher than shown by the perpetual records. Which of the following could explain the difference?

• A) Credit memos for several items returned by customers had not been recorded.
• B) Inventory items had been counted but the tags placed on the items had not been taken off the items and added to the inventory accumulation sheets.
• C) An item purchased 'FOB shipping point' had not arrived at the date of the inventory count and had not been reflected in the perpetual records.
• D) No journal entry had been made on the retailer's books for several items that the retailer returned to its suppliers.

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Definitions:

Shortage

A situation where the demand for a product or service exceeds the supply available at a given price.

Equilibrium Price

The price at which the quantity of a product offered is equal to the quantity of the product in demand.

Government Imposes

Refers to regulations, taxes, or policies that a government enforces or puts into effect in order to manage the country's affairs.

Floor

The minimum price or wage level that is legally or otherwise formally set, below which the actual price or wage cannot fall.