The Physical Count of Inventory of a Retailer Was Higher

question 65

Multiple Choice

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

• A)Inventory items had been counted but tags placed on the items had not been taken off the items and added to the inventory accumulation sheets.
• B)Credit memos for several items returned by customers had not been prepared.
• C)No journal entry had been made on the retailer's books for several items returned to its suppliers.
• D)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.

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Definitions:

Fixed Costs

Fixed costs are expenses that do not fluctuate with changes in production volume or business activity levels.

Service Department

An organizational unit that provides support to the main production operations, often through maintenance, logistics, or administrative services.

Order Fulfillment Department

The division within a company that is responsible for processing customer orders and ensuring they are delivered to the correct address in a timely manner.

Variable Costs

Costs that change in proportion to the level of goods or services produced or sold.