ECONOMICS

Detailed explanation-1: -Inventory is classified as a current asset in a classified balance sheet. If net sales are $800, 000 and cost of goods sold is $600, 000, the gross profit rate is 25%. Inventory is reported as a long-term asset on the balance sheet.

Detailed explanation-2: -Merchandise inventory comprises the goods that retailers and resellers have purchased with the intent to sell to customers. Merchandise inventory is categorized as a current asset on the company’s balance sheet. For some retailers, it is their biggest asset.

Detailed explanation-3: -The following statements regarding merchandise inventory are true except: Merchandise inventory is reported on the balance sheet as a current asset.

Detailed explanation-4: -Which of the following would cause periodic ending inventory to be overstated? Purchased goods shipped FOB destination and not yet delivered are included in the physical count.