AccountingPrinciplesInventories幻灯片.pptxVIP

6InventoriesLearning ObjectivesDiscuss how to classify and determine inventory.1Apply inventory cost flow methods and discuss their financial effects.2Indicate the effects of inventory errors on the financial statements.3Explain the statement presentation and analysis of inventory.4Discuss how to classify and determine inventory.LEARNINGOBJECTIVE1Classifying InventoryManufacturing CompanyMerchandising CompanyThree Classifications:Raw MaterialsWork in ProcessFinished GoodsOne Classification:InventoryHelpful Hint Regardless of theclassification, companies report all inventories under Current Assets on the balance sheet.LO 1LO 1Determining Inventory QuantitiesPhysical Inventory taken for two reasons:Perpetual SystemCheck accuracy of inventory records.Determine amount of inventory lost due to wasted raw materials, shoplifting, or employee theft.Periodic SystemDetermine the inventory on hand.Determine the cost of goods sold for the period.LO 1Determining Inventory QuantitiesTAKING A PHYSICAL INVENTORY Involves counting, weighing, or measuring each kind of inventory on hand.Companies often “take inventory”when the business is closed or business is slow.at the end of the accounting period.LO 1LO 1Determining Inventory QuantitiesDETERMINING OWNERSHIP OF GOODSGOODS IN TRANSITPurchased goods not yet received.Sold goods not yet delivered.Goods in transit should be included in the inventory of the company that has legal title to the goods. Legal title is determined by the terms of sale.LO 1Determining Ownership of GoodsGOODS IN TRANSITIllustration 6-2 Terms of saleOwnership of the goods passes to the buyer when the public carrier accepts the goods from the seller.Ownership of the goods remains with the seller until the goods reach the buyer.LO 1Determining Ownership of GoodsQuestionGoods in transit should be included in the inventory of the buyer when the: public carrier accepts the goods from the seller. goods reach the buyer. terms of sale are FOB destination. terms of s