太原工业学院管理工程系会计学原理英文课件CHAPTER7 Merchandise Inventory and Cost of Sales.pptVIP

Identify the components and costs included in merchandise inventory. Calculate the cost of goods sold and merchandise inventory using specific identification, moving weighted average, FIFO, and LIFO-perpetual. Analyze the effects of the costing methods on financial reporting. Calculate the lower of cost or market value of inventory. Analyze the effects of inventory errors on current and future financial statements-perpetual. Apply both the gross profit and retail methods to estimate inventory. Calculate cost of goods sold and merchandise inventory using specific identification, weighted average, FIFO, and LIFO-periodic. (Appendix 7A). Analyze the effects of inventory errors on current and future financial statements-periodic. (Appendix 7A). Assess inventory management using both merchandise turnover and days’ sales in inventory. (Appendix 7B) Assigning Costs to Inventory Items to include in cost. Inventory System. Perpetual or Periodic Costing Method. FIFO, LIFO, Moving Weighted Average, Specific ID Use of estimates. Gross profit method, Retail inventory method Items requiring special attention: Goods in Transit Goods on consignment Obsolete or damaged goods All expenditures necessary to bring an item to a saleable condition and location. This includes: Invoice price less discounts Import duties Transportation-in Storage Insurance Assigning Costs to Inventory Management must decide on method of determining unit cost. This will affect both the income statement and the balance sheet. Methods: Specific Identification FIFO LIFO Average Cost Merchandising Cost Flows Use of Inventory Methods in Practice Specific Identification This method is used when items: Are unique. Can be directly identified with a specific purchase and its invoice. Specific Identification — Example Specific Identification — Example Specific Identification — Example Specific Identification — Example Moving Weighted Average Method Under this method, the cost of all units are averaged toget