Ending Inventory Is Equal to the Cost of Items on Hand

question 171

Multiple Choice

Ending inventory is equal to the cost of items on hand plus:

• A)Items in transit sold FOB shipping point.
• B)Sales discounts.
• C)Items in transit sold FOB destination.
• D)Advertising expense.

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Definitions:

Internal Controls

Mechanisms, policies, and procedures implemented by a company to ensure the integrity of financial and accounting information, promote accountability, and prevent fraud.

Safeguarding Assets

Refers to the actions and policies put in place by an organization to protect its assets from theft, damage, or misuse.

Voucher System

A method of accounting in which documents are used to authorize and record transactions.

Cash Receipts

Money received by a business from its operations, including cash sales and collections on credit accounts.