Inventory

Question 1

Inventoriable Costs

Answer 1

Any cost incurred to bring the merchandise to a salable condition (shipping insurance to a consignment location)

Question 2

Sales commissions

Answer 2

are a selling expense and are never included in inventory costs.

Question 3

Periodic vs. Perpetual inventory

Answer 3

Periodic relies on occasional physical inventory counts to determine ending inventory. Perpetual keeps continual track.

Question 4

Cost to retail ratio

Answer 4

Cost of goods available for sale / Retail goods price

Question 5

Retail inventory method

Answer 5

Takes inventory at retail price, multiplies by the cost to retail ratio to reach ending inventory at cost.