Asked by Angelica Golebiewski on Jun 06, 2024
Verified
The major issue in inventory accounting is
A) determining whether to take inventory using cycle counts as opposed to counting all inventory only at the end of the year.
B) deciding whether to maintain records on a periodic or perpetual basis.
C) determining what goods to include in inventory.
D) choosing the method for allocating goods available for sale to ending inventory and cost of goods solD.
Inventory Accounting
The method of accounting that focuses on the valuation, recording, and management of inventory, including the cost of goods sold.
Goods Available for Sale
The total quantity of goods that a company has on hand and can sell at any given time, including both finished goods and those still in production.
- Acquire knowledge about the strategic elements involved in inventory management such as consignment and cycle counting.
- Learn about the flexibility allowed in inventory accounting methods and the strategic decisions firms make in adopting these methods.
Verified Answer
CM
Celeste MartinezJun 07, 2024
Final Answer :
D
Explanation :
Determining the method for allocating goods available for sale to ending inventory and cost of goods sold is a major issue in inventory accounting because it directly affects the financial statements' accuracy and the cost of goods sold calculation, impacting gross profit and net income.
Learning Objectives
- Acquire knowledge about the strategic elements involved in inventory management such as consignment and cycle counting.
- Learn about the flexibility allowed in inventory accounting methods and the strategic decisions firms make in adopting these methods.