A Company Markets a Climbing Kit and Uses the Perpetual

question 171

Multiple Choice

A company markets a climbing kit and uses the perpetual inventory system to account for its merchandise.The beginning balance of the inventory and its transactions during January were as follows:
If the ending inventory is reported at $276,which inventory method was used?

• A)LIFO method
• B)FIFO method
• C)Weighted average method
• D)Specific identification method
• E)Retail inventory method

Analyze the impact of inventory valuation methods on financial reporting.

Calculate and interpret inventory turnover ratios.

Understand the principles and effects of writing down inventory to net realizable value.

Understand correcting entries for previously understated or overstated inventories.

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Definitions:

Carrying Value

The net amount of an asset or liability that is recorded on the financial statements, taking into account factors like depreciation or amortization.

Dividend Revenue

Income earned from owning shares of a company, paid out from the company's earnings.

Cash Dividend

A cash payment of earnings made by a company to its stockholders.

Equity Securities

Financial instruments representing ownership interest in a company, such as stocks.