Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

5. Inventory

Physical Inventory Count, Ownership of Goods, and Consigned Goods

Financial Accounting

5. Inventory

Physical Inventory Count, Ownership of Goods, and Consigned Goods

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Multiple Choice

Which of the following is a good inventory storage practice?

Allowing employees to remove inventory without documentation

Placing inventory in random locations to save time

Mixing consigned goods with company-owned inventory without labeling

Storing inventory in a secure, organized area with restricted access

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Verified step by step guidance

Understand the importance of inventory management: Inventory represents a significant asset for a company, and proper storage practices ensure accuracy in financial reporting and operational efficiency.

Evaluate the options provided: Each option should be analyzed to determine whether it aligns with good inventory storage practices. For example, removing inventory without documentation can lead to discrepancies, and mixing consigned goods with company-owned inventory can cause confusion in ownership and valuation.

Identify the characteristics of good inventory storage practices: These include secure storage to prevent theft or loss, organized placement to facilitate tracking and retrieval, and restricted access to ensure accountability.

Compare the correct answer to the options provided: The correct answer emphasizes secure, organized storage with restricted access, which aligns with best practices in inventory management and supports accurate financial accounting.

Conclude why the correct answer is appropriate: Storing inventory in a secure, organized area with restricted access minimizes errors, ensures proper documentation, and supports compliance with accounting standards.