ACC 304 help A Guide to career/Snaptutorial ACC 304 help A Guide to career/Snaptutorial | Page 24

1. A manufacturing concern would report the cost of units only
partially processed as inventory in the balance sheet.
2. Both merchandising and manufacturing companies normally
have multiple inventory accounts.
3. When using a perpetual inventory system, freight charges on
goods purchased are debited to Freight-In.
4. If a supplier ships goods f.o.b. destination, title passes to the
buyer when the supplier delivers the goods to the common carrier.
5. If ending inventory is understated, then net income is
understated.
6. If both purchases and ending inventory are overstated by the
same amount, net income is not affected.
7. Freight charges on goods purchased are considered a period
cost and therefore are not part of the cost of the inventory.
8. Purchase Discounts Lost is a financial expense and is
reported in the ―other expenses and losses‖ section of the income
statement.
9. The cost flow assumption adopted must be consistent with the
physical movement of the goods.