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Kisachek [45]
3 years ago
10

ABC purchases inventory for $2,000 and incurs shipping costs of $100 for the goods to be delivered. To record this transaction,

the company debits Inventory for $2,000, debits Selling Expenses for $100, and credits Cash for $2,100. Which of the following statements is correct?
A) Revenues are understated.
B) All accounts are accurately stated.
C) Net income is overstated.
D) Assets are understated.
Specific Identification is used by:
A) Starbucks
B) Manufacturers
C) Grocery Stores
D) Car dealers
Business
1 answer:
Rus_ich [418]3 years ago
6 0

Answer: 1. D) Assets are understated

2. D) Car dealers

Explanation:

1. The shipping costs to bring Inventory into a business are known as Carriage Inwards. This amount is to be debited with the Inventory as it is considered to be part of the cost of acquiring the inventory. By not putting this cost with the inventory, ABC is undervaluing the inventory account which is an Asset account. The Assets are therefore understated.

2. The Specific Identification Method of inventory valuation is based on each individual unit purchased or sold. It does not group items and tracks each item from the moment it is purchased to the moment it is sold so the cost of the specific inventory is known. This method is used more often by businesses that deal with easily identifiable items such as Jewellers and Car dealers because each car is big enough to be tracked individually.

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3 0
3 years ago
Dwight, the general manager of a hotel, knows that one of his housekeeping employees has a serious substance-abuse issue. Dwight
Oksana_A [137]

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3 years ago
The difference between the actual cost incurred and the standard cost is called the?
Taya2010 [7]

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4 0
1 year ago
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Triss [41]

Answer:

Explanation:

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Capitalist

Historically, these societies leverage market forces, such as supply and demand, with a strong motivation to earn a profit, to shape their economic models.

8 0
3 years ago
value of stock is an amount assigned per share by the corporation in its charter. In many states, this amount establishes the mi
zhenek [66]

Answer: par value

Explanation:

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Answer

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