Question Details

What is consigned inventory 



1.	How is a significant amount of consignment inventory reported in the statement of financial position?
a.	The inventory is reported separately on the consignor's statement of financial position.
b.	The inventory is combined with other inventory on the consignor's statement of financial position.
c.	The inventory is reported separately on the consignee's statement of financial position.
d.	The inventory is combined with other inventory on the consignee's statement of financial position.

	2.	Where should goods in transit that were recently purchased f.o.b. destination be included on the statement of financial position?
a.	Accounts payable.
b.	Inventory.
c.	Equipment.
d.	Not on the statement of financial position.
3.	If a company uses the periodic inventory system, what is the impact on net income of including goods in transit f.o.b. shipping point in purchases, but not ending inventory?
a.	Overstate net income.
b.	Understate net income.
c.	No effect on net income.
d.	Not sufficient information to determine effect on net income.

	4.	If a company uses the periodic inventory system, what is the impact on the current ratio of including goods in transit f.o.b. shipping point in purchases, but not ending inventory?
a.	Overstate the current ratio.
b.	Understate the current ratio.
c.	No effect on the current ratio.
d.	Not sufficient information to determine effect on the current ratio.

	5.	What is consigned inventory ?
a.	Goods that are shipped, but title transfers to the receiver.
b.	Goods that are sold, but payment is not required until the goods are sold.
c.	Goods that are shipped, but title remains with the shipper.
d.	Goods that have been segregated for shipment to a customer.




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