Quiz Ch 06 – T/F Handling of Consigned Merchandise in a Seller’s Balance Sheet
Financial Accounting
Thomas, Tietz, and Harrison
12th Edition
Consigned merchandise is not included in the seller’s balance sheet as it is not owned by the seller.
Consigned merchandise is not included in the seller’s balance sheet as it is not owned by the seller.
Net realizable value is the market value of inventory as defined by IFRS.
Overstated ending inventory inflates gross profit.
If ending inventory is overstated in the current year, it will result in understated net income for the following year.
Inventory cost is reduced by a purchase discount.
The income statement of service entities reflects the cost of goods sold.
The inventory costing method has no effect on a company’s balance sheet.
The balance sheet reports inventory at the selling price of the remaining items.
All industries should have a uniform inventory turnover ratio.
Companies can use LIFO for tax purposes while using FIFO for financial reporting as allowed by the Internal Revenue Service.