Question

Listed below are several terms and phrases associated with inventory measurement. Pair each item from the list below with the item of the following list that is most appropriately associated with it.
1. Perpetual inventory system
2. Periodic inventory system
3. F.o.b. shipping point
4. Gross method
5. Net method
6.Cost index
7. F.o.b. destination
8. FIFO
9. LIFO

a. Legal title passes when goods are delivered to common carrier.
b. Goods are transferred to another company but title remains with transferor.
c. Purchase discounts not taken are included in inventory cost.
d. If LIFO is used for taxes, it must be used for financial reporting.
e. Assumes items sold are those acquired first.
f. Assumes items sold are those acquired last.
g. Purchase discounts not taken are considered interest expense.
h. Used to convert ending inventory at year-end cost to base year cost.
i. Continuously records changes in inventory.

Answer 1

Answer:

Explanation:

. Perpetual inventory system --- Continuously records changes in inventory

2. Periodic inventory system---- Adjusts inventory at the end of the period.

3. F.o.b. shipping point----- Legal title passes when goods are delivered to common carrier.

4. Gross method--- Purchase discounts not taken are included in inventory

5. Net method--- Purchase discounts not taken are considered interest expense.

6.Cost index--- Used to convert ending inventory at year-end cost to base year cost.

7. F.o.b. destination---Legal title passes when goods arrive at location.--- The meaning was not provided

8. FIFO--- Assumes items sold are those acquired first.

9. LIFO----Assumes items sold are those acquired last.

10. Consignment---Goods are transferred to another company but title remains with transferor ---this has a meaning but did not have the word consignment included

11.IRS conformity rule----- If LIFO is used for taxes, it must be used for financial reporting.

-- this had the meaning but the word IRS conformity rule was not on the list

Answer 2

Answer:

The grouping of the items and measurements are in the explanation

Explanation:

The question is to determine the placement of the items based on the inventory measurement list given

Inventory measurement                               Item  to be measured

1. Perpetual inventory system                  Continuously records changes in    

                                                                inventory

2. Periodic inventory system                  Continuously records changes in    

                                                                inventory

3. F.o.b. shipping point                            Legal title passes when goods are

                                                                 delivered to common carrier.

4. Gross method                                       Purchase discounts not taken are

                                                                 included in inventory cost.

5. Net method                                          Purchase discounts not taken are

                                                                 considered interest expense.

6.Cost index                                             Used to convert ending inventory at

                                                                 year-end cost to base year cost.

7. F.o.b. destination                                  Goods are transferred to another

                                                                  company but title remains with

                                                                  transferor.

8. FIFO                                                      Assumes items sold are those

                                                                 acquired first.

9. LIFO                                                      Assumes items sold are those

                                                                 acquired last.

Quite a  number of the items are self explanatory for instance, FIFO is first in first out and it deals with inventory sold based on those acquired first and the cost while LIFO is last in first out and it deals with inventory based on the cost of those that were acquired last

Also F.O.B shipping point means the seller of a product bears all risks until it gets to the destination while F.O.B destination means the risks on board shipping are already borne by the receipient.

It should also be noted that any thing that deals with the continous record of inventory is taken care of either by the perpetual inventory system or the periodic inventory system.