15. The full disclosure principle the A. Prescribes that when a change in invent
ID: 2517190 • Letter: 1
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15. The full disclosure principle the A. Prescribes that when a change in inventory valuation method is made, notes to the statements report the type of changs net income , its justification and its effect on B. Requires that companies use the same accounting method for inventory valuation period after period C. Is not subject to the materiality principle. D. Is only applied to retailers E. Is also called the consistency principle 16. The inventory tumover ratio is calculated as A. Cost of goods sold divided by average merchandise inventory B. Sales divided by cost of goods sold. C. Ending inventory divided by cost of goods sold D. Cost of goods sold divided by ending inventory E. Cost of goods sold divided by ending inventory times 365 17. Tops had cost of goods sold of s9,421 million. ending inventory of S2.089 nventory turnover equals: million, and average inventory of $1,965 million. Itsi A. 0.21. B. 4.51 C. 4.79 D. 76.1 days E. 80.9 days. 18. A company had the following purchases during the current year: 10 units at $120 Janusry: February: 20 units at $130 May: September: 12 units at $150 November: 10 units at $160 15 units at $140 On December 31, there were 26 units remaining in ending inventory. These 26 units consisted of 2 from January, 4 from February, 6 from May, 4 from September, and 10 from November. Using the specific identification method. what is the cost of the ending inventory? A. 33,500. B. $3,800. C. S3,960. D. $3.280. E. $3,640Explanation / Answer
(15):- ANS :-( A )
Full disclosure means that you should always report existing accounting policies, as well as any changes to those policies (such as changing an asset valuation method) from the policies stated in the financials for a prior period.
The full disclosure principle states that you should include in an entity's financial statements all information that would affect a reader's understanding of those statements. The interpretation of this principle is highly judgmental, since the amount of information that can be provided is potentially massive. To reduce the amount of disclosure, it is customary to only disclose information about events that are likely to have a material impact on the entity's financial position or financial results.
(16):- ANS:- ( a ) Inventory turnover is a ratio showing how many times a company's inventory is sold and replaced over a period of time. The days in the period can then be divided by the inventory turnover formula to calculate the days it takes to sell the inventory on hand. It is calculated as sales divided by average inventory.
Inventory Turnover = Cost of Goods Sold /Average Inventories
( 17) :- ANS :- (c) 4.79
inventory turnover = cost of good sold / avg. Inventories
= cost of good sold = $ 9,421 ( given )
= avg. Inventories = $ 1,965 ( given )
= $ 9,421 / $ 1,965
= 4.79
( 21) :- ans :- ( B ) A source document is the original record containing the details to substantiate a transaction entered in an accounting system.
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