Final answer:
The physical inventory count can be higher than perpetual records due to duplicate counting, unrecorded returns, and items in transit. Banks list money as assets that might not be physically present due to the fractional reserve system. Loan values in the secondary market fluctuate based on the borrower's payment history, profitability, and changes in interest rates.
Step-by-step explanation:
When a retailer's physical count of inventory is higher than that shown by the perpetual records, several circumstances could explain the variance. One possibility is that inventory items were counted more than once, which can occur if the inventory tags placed on the items were not removed after counting, leading to a duplication when added to the inventory accumulation sheets. Another explanation could be that returned items were not accounted for, specifically when credit memos for returned customers' items had not been recorded or items returned to suppliers were not journalized. These discrepancies can result in the perpetual records showing lower figures compared to the actual physical count. Additionally, if an item purchased FOB shipping point had not arrived by the inventory count date, it would not appear in the physical inventory nor reflect in the perpetual records, yet it should be included in the inventory count if the ownership has passed to the retailer.
As for the money listed under assets on a bank balance sheet not actually being present in the bank, this can be due to the banks operating under a fractional reserve banking system, where only a fraction of the bank's deposits are held in reserve, and the remainder is used for loans and other investments. This system allows banks to leverage their deposits to create credit and earn interest.
In the secondary market for loans, a buyer would be willing to pay more or less for a loan based on various factors. If a borrower has been late on payments, the loan is riskier, and the buyer would likely pay less for it. Conversely, if interest rates rise after the loan was made, the older loan's lower rate is less attractive, so it would be valued lower. If the borrower is highly profitable, the loan is more secure, potentially raising its value. If interest rates fall, existing loans with higher rates become more valuable, so a buyer would pay more for such loans.