Well, motor vehicles would fall undernon-current assetsin thebalance sheetfor most businesses. However, in this particular case, the business intends to sell them as part of their regular business operations (and in less than a year), and so these cars are classified as "inventory" under the...
Answer to questions in Chapter 3 Multiple Choice Questions D 2. B 3.C 4.C 5.D 6.B 7.B 8.B 9. B 10.B Discussion Questions 1. What is the difference between periodic and perpetual inventory systems? Answer: There are two alternative approaches that can be used in accounting for ...
Materiality is a fundamental principle in reclassification accounting. According to this principle, financial information should be presented and classified in a manner that reflects its significance to the decision-making process of users. The determination of materiality involves assessing the nature, si...
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Accounting: Accounting is more than adding up figures in a business, it is an organizational method for understanding how a business operates to make decisions. To operate effectively, businesses need to account for different factors in production and understand how those factors influence one another...
Inventory financing is a form of working capital that allows businesses to purchase inventory on credit, using the purchased stock itself as collateral for the loan.It’s often used by medium-sized companies looking to boost their stock reserves in preparation for demand, without drastically ...
Inventories include items used as part of the company’s operating cycle. Concept of Inventory Management (With Factors that Influence Inventory Level) The word inventory refers to the stocks, which can be broadly classified into three categories, such as raw materials, work-in-progress, and finis...
A major issue in accounting is whether specific expenditures should be classified as expenses – which one is reported straight away on the company’s income statement – or a capital expenditure, or a cost that is subject to depreciation, which is not an expense. ...
We will look at how each of these can be optimized by good inventory management processes in the benefits section below. Types of Inventory Inventory can be broadly classified into three categories: raw materials/components, work in progress, and finished goods. ...
As noted above, inventory is classified as a current asset on a company's balance sheet, and it serves as a buffer betweenmanufacturingand order fulfillment. When an inventory item is sold, its carrying cost transfers to thecost of goods sold (COGS)category on the income statement. Under U....