Author Question: Which of the following has the highest level of authority for a government in the governmental GAAP ... (Read 62 times)

cagreen833 · **on:** Jul 6, 2018

Which of the following has the highest level of authority for a government in the governmental GAAP hierarchy?

A. A FASB standard on pension accounting.
B. A GASB standard on pension accounting.
C. AICPA state and local government audit guide coverage of pensions.
D. The coverage of pensions in a Journal of Accountancy article.

Question 2

For companies using the periodic inventory system, explain how the Merchandise Inventory account is handled in the accounting records through the journal entries and the work sheet.

johnpizzaz · **Reply #1 on:** Jul 6, 2018

Answer to Question 1

B

Answer to Question 2

Merchandise Inventory is adjusted at year end. Two adjusting entries are required. The first entry removes the old inventory figure by crediting Merchandise Inventory for the old balance and debiting Income Summary. The second entry places the latest, or ending inventory figure in the inventory account, by debiting Merchandise Inventory and crediting Income Summary. On the work sheet, the beginning balance of Merchandise Inventory is listed in the Trial Balance Debit column. The adjusting entries are recorded in the Adjustments columns. The amounts on the Income Summary line are recorded in the Income Statement columns with the beginning inventory amount recorded in the Debit column and the ending inventory amount recorded in the Credit column. The ending inventory is recorded on the Merchandise Inventory line in the Balance Sheet Debit column.