Question

1- Why do we post the total of the cash column instead of each individual cash transaction that is shown in the cash receipts or cash payments journal?

In perpetual inventory, why does paying shipping on good you purchase make your merchandise inventory account increase.

2- List a type of good that would be inventoried using the FIFO method.

List a type of good that would be inventoried using the LIFO method.

Why is it a good idea to do a bank reconciliation monthly?

3- The text listed the following factors that shift a Supply Curve: Technology, Price of Relevant Goods, Price of Alternative Goods, and the Number of Producers.

Discuss how one or more of the factors influenced the change in gasoline price since 2012.

Answer 1

1- Why do we post the total of the cash column instead of each individual cash transaction that is shown in the cash receipts or cash payments journal?

Answer:-

Special Journals

In a typical 2-column manual accounting system, transactions are entered as debits to one (or more) account and balancing credits to one (or more) account. If you consider some recurring transactions (such as sales) that will hopefully occur many times during an accounting cycle, all this double entry can add up to a lot of work. That's where special journals come into play.

Special journals are designed as a simple way to record a single type of frequently occurring transaction.Such as Cash Payment Journals

The Cash Payments Journal is used to record all cash payments made by a company. (Credit purchases are not recorded here, they belong in the purchases journal.)

All transactions in the cash payments journal involve the disbursement of cash, so you'll find a column for crediting cash (Cash CR.). There is also a credit column for purchases discounts in case the transaction involves a discounted purchase.To Balance all the Debit Transactions occurs during the period we just total all the debit amount and pass one Credit into Cash payments Journal.

b) In perpetual inventory, why does paying shipping on good you purchase make your merchandise inventory account increase?

Answer:-

Under the perpetual inventory system, remember we only use 3 accounts: Cash, Inventory and Accounts Payable. We want to constantly update the inventory balance to match what we actually paid. We will debit Inventory for the shipping cost and credit cash or accounts payable depending on if we paid it now or later.

Perpetual systems include 'all costs necessary to get inventory ready to sell' as inventoriable costs. Regardless of whether a perpetual or period system is used, the following costs are included as part of inventoriable costs:

• Invoice costs less early payment discounts

• Shipping costs to acquire inventory (Freight-in or transportation-in)

Thus Shipping on good purchased will let your make your merchandise inventory account increase.

2- List a type of good that would be inventoried using the FIFO method.?

Answer:-

The first-in, first-out inventory (FIFO) :- Moving older stock first can increase your company's profits, especially if the items you sell are prone to being impacted by inflation or spoilage. It can also more accurately reflect the actual cost of certain products relative to other methods of inventory tracking.

List of Goods Which would be inventoried using FIFO:-

1. Perishable Commodities such as :- Milk, Bread, Egg, Cakes usually followed by confectionaries stores.

2. Goods for Export.

b)List a type of good that would be inventoried using the LIFO method :-

Answer:-

LIFO stands for Last In, First Out which implies that the inventory which was added last to the stock will be removed from the stock first. So the inventory will leave the stock in an order reverse of that in which it was added to the stock.

Examples :-

1. In case of Inflation if the price of raw material Increases.

2. Other than Perishable goods.

3. Goods which are subject to Price Rise.

c) Why is it a good idea to do a bank reconciliation monthly ?

Answer:-

Bank reconciliation is the practice of comparing your records against the bank records. A monthly reconciliation helps you identify any unusual transactions that might be caused by fraud or accounting errors.

Why it is good idea :-

A regular review of your accounts can help you identify problems before they get out of hand.

Business bank accounts are not as protected as consumer accounts under federal law, which means you can’t count on the bank to cover fraud and errors in your account. A drained business account can be devastating.so to prevent it monthly reconcilliations play important role.

3) Discuss how one or more of the factors influenced the change in gasoline price since 2012?

Answer:-

There are many factors which influenced price change in gasoline, some are discussed below:-

1.Taxes

The price of every gallon of gasoline includes taxes—federal, state, and local taxes.11 The federal excise tax on gasoline has remained at 18.4 cents per gallon since 1993, with about 60 percent of the amount set aside for highway and bridge construction.12 State gasoline taxes vary, however, and the average state tax on gasoline is 24.17 cents per gallon. Some states and localities add additional taxes to the price of gasoline, including local and state sales taxes and a variety of other taxes.

2.Supply and Demand

The price of crude oil is determined by global supply and demand. As global demand increases or supply decreases, the price of crude oil increases. Conversely, as global demand decreases or supply increases, the price decreases.

Behind the signs are numerous factors that determine gasoline prices: taxes, location, seasonal and weather effects, but especially the price of crude oil. The global supply and demand for crude oil dictate its price in the global marketplace and ultimately the price at the pump.