Answer to Question #269728 in Accounting for Riley

Question

True or False

1. If the market value of a company’s inventory increases, the company should record a gain.

2. A company should include costs of transporting an item to its store when determining the cost of the item.

3. A company that uses a perpetual inventory system should still perform a physical inventory count.

4. In a perpetual system, but not a periodic system, cost of goods sold is determined and recorded at the time of sale.

5. If inventory is shipped FOB shipping point, the buyer takes title as soon as the inventory leaves the seller’s warehouse.

Answer 1

Solution:

1. If the market value of a company’s inventory increases, the company should record a gain - True

2. A company should include costs of transporting an item to its store when determining the cost of the item – True.

3. A company that uses a perpetual inventory system should still perform a physical inventory count – True.

4. In a perpetual system, but not a periodic system, cost of goods sold is determined and recorded at the time of sale – True.

5. If inventory is shipped FOB shipping point, the buyer takes title as soon as the inventory leaves the seller’s warehouse – True.