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

Previous problemNext problem

Struggling with Financial Accounting?

Join thousands of students who trust us to help them ace their exams!Watch the first video

Multiple Choice

Which of the following best describes the purpose of taking a physical count of inventory at the end of an accounting period?

To determine the market value of inventory for tax purposes.

To verify the actual quantity of inventory on hand and adjust the accounting records if necessary.

To record the cost of goods sold for the next accounting period.

To estimate future sales based on current inventory levels.

Previous problemNext problem

Verified step by step guidance

Understand the concept of inventory: Inventory refers to the goods a company holds for sale or production. It is a key asset and is tracked in accounting records.

Recognize the purpose of a physical count: A physical count of inventory is conducted to verify the actual quantity of inventory on hand at the end of an accounting period.

Identify the relationship between physical count and accounting records: The physical count helps ensure that the inventory recorded in the accounting system matches the actual inventory on hand. Discrepancies may arise due to theft, damage, or errors in record-keeping.

Understand the adjustment process: If discrepancies are found during the physical count, adjustments are made to the accounting records to reflect the accurate inventory levels. This ensures the financial statements are correct.

Clarify the purpose: The primary purpose of the physical count is not to determine market value, estimate future sales, or record cost of goods sold for the next period, but to verify and adjust inventory quantities in the accounting records.