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If inventory is being valued at cost and the price level is steadily rising discuss which of the two methods of costing FIFO or LIFO will yield the lowest annual income tax expense.?
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Is insurance on inventory a direct expense?
insurance is an indirect expense.............
Is inventory shrinkage recorded as an expense?
As a reduction to merchandise inventory
What is a potential advantage of variable costing relative to absorption costing?
In absorption costing, you would apply fixed overhead costs for your business to the cost of manufacturing products on a per-unit basis. In variable costing, the fixed overhead costs would be a lump sum (including all variable expenses such as supplies and raw materials) rather than a per-unit expense. One potential advantage of variable costing would be that when you finally sell all products in your inventory, you will have an income surplus, because you would not have previously received revenues for items that were in your inventory.
Cost of inventory should be classified as?
expense
Is freight in considered a cost of purchasing inventory?
yes.....direct expense..
Is insurance on inventory a direct expense?
insurance is an indirect expense.............
Is inventory shrinkage recorded as an expense?
As a reduction to merchandise inventory
What is a potential advantage of variable costing relative to absorption costing?
In absorption costing, you would apply fixed overhead costs for your business to the cost of manufacturing products on a per-unit basis. In variable costing, the fixed overhead costs would be a lump sum (including all variable expenses such as supplies and raw materials) rather than a per-unit expense. One potential advantage of variable costing would be that when you finally sell all products in your inventory, you will have an income surplus, because you would not have previously received revenues for items that were in your inventory.
What are the advantages of using absorption costing?
One advantage of using absorption costing is that if you have items still in inventory at the end of an accounting period, you don't have to report the expense until the items are actually sold. The disadvantage is, this method can artificially increase your profit figures because the profit-and-loss statement isn't going to reflect all the expenses you had during the accounting period.
Cost of inventory should be classified as?
expense
Is freight in considered a cost of purchasing inventory?
yes.....direct expense..
Is inventory write off a non cash expense?
It is non cash since you credit the inventory account rather than cash.
How does product cost become an asset and than an expense?
when units of inventory are sold
When the variable costing method is used how does fixed factory overhead appear on the income statement?
fixed expense
How do you capitalize inventory?
To capitalize inventory, you record it as an asset on your company's balance sheet instead of as an expense on the income statement. This involves recognizing the cost of acquiring inventory as an asset rather than an immediate expense, which can help in better aligning expenses with revenues.
What part of the elements of financial statements does inventory bleong to?
Inventory is part of Balance sheet as well as income statement. Inventory is shown as an asset in balance sheet and as an expense when used in income statement.
How do you calculate Non-cash Working Capital?
Inventory+AR+Prepaid expense-Current Liabilities
