Chapter 7 Condensed (Day 1)
|
|
- Linda Lester
- 6 years ago
- Views:
Transcription
1 Chapter 7 Condensed (Day 1) I. Valuing and Cost of Goods Sold (COGS) II. Costing Methods: Specific Identification, FIFO, LIFO, and Average Cost III. When managers use FIFO, LIFO, and Average Cost IV. Lower-of-Cost-or-Market (LCM) V. Turnover Ratio VI. Perpetual and Periodic Systems VII. Errors in valuing inventory I. Valuing and Cost of Goods Sold (COGS) A. tangible property that is (1) held for sale in the normal course of business or (2) used to produce goods or services for sale. is an asset. Paper is inventory for Dunder Mifflin, but supplies for Northeastern. Cars are inventory for Ford, but equipment for Northeastern. B. Types of : Merchandise and Manufacturing R4 i. Merchandise inventory Costs include the sum of costs incurred in bringing an article to usable or salable condition and location i. Invoice Price ii. Freight In (NOT freight out, which is a shipping expense) iii. Import Taxes and duties iv. Inspection Costs v. Preparation Costs assembly, etc. Include everything it takes to get the merchandise to its salable condition. Buy inventory entry Dr. Cr. Cash Freight in entry Dr. Cr. Cash E.g. Based on its physical count of inventory in its warehouse at year-end, Dec 31, 2011, Madison Company planned to report inventory of $34,500. During the audit, the independent CPA uncovered the following additional information: Supplier Madison Company Customers $700 -> 1
2 -> $650 -> $1,500 a. Goods from a supplier costing $700 are in transit with UPS on December 31, The terms are FOB shipping point. Because these goods had not yet arrived, they were excluded from the physical inventory count b. Madison delivered samples costing $1,800 to a customer on December 27, 2011, with the understanding that they would be returned to Madison on January 15, Because these goods were not on hand, they were excluded from the inventory count. Counts as inventory, because it will be returned +1,800 Your inventory doesn t have to be on hand at a company for it to be inventory (ex. consignment store) c. On December 31, 2011, goods in transit to customers, with terms FOB shipping point, amounted to $6,500 (expected delivery date January 10, 2012). Because the goods had been shipped, they were excluded from the inventory count. It should have been excluded from the inventory count do nothing. +0 d. On December 31, 2011, goods in transit to customers, with terms FOB destination, amounted to $1,500 (expected delivery date January 10, 2012). Because the goods had been shipped, they were excluded from the inventory count. +1,500 e. Madison only includes the invoice price in the value of their inventory. The auditor uncovered these additional costs: i. Freight on goods purchased from vendors = $ ii. Freight on goods sold to customers = $ (freight out) iii. Inspection Costs = $ iv. Interest (6.0%) on $2,250 borrowed to finance the purchase of inventory +0 You have to finance everything, this is not really part of getting items into their salable condition. Compute the correct amount for ending inventory $39,125 ii. Manufacturing i. Raw Materials ii. Work in Process iii. Finished Goods iv. Direct labor cost v. Factory Overhead Costs (eg. Heat, light, and power to operate the factory) C. Cost of Goods Sold (COGS) directly related to Sales revenue Dr. A/R or Cash 2
3 Cr. Sales Revenue = number of units sold multiplied by the sales price Dr. COGS = number of units multiplied by their unit costs Cr. How do we get the unit costs? Cost of goods sold equation: Beginning inventory + Purchases of merchandise Cost of Goods available for sale (COGAS) Ending inventory Cost of goods sold (COGS) Merchandise (A) Beginning inventory Add: Purchases of inventory Ending inventory Deduct: Cost of goods sold II. Costing Methods: Specific Identification, FIFO, LIFO, and Average Cost Specific identification: used by some industries, such as antique dealers Four alternative methods used costing differs because the price of inventory and raw materials fluctuates throughout time. A. Specific Identification Method identifies the cost of the specific item sold. Eg. Retailer Inc. provides the following information related to its merchandise inventory for 2007: Purchases: January ,800 1,800 $23,900 (COGAS) We have a generally inflationary economy, so most will be rising costs. Specific Identification Retailer sold 50 units from the beginning inventory, 400 units from the January purchase, 450 units from the May purchase, 450 units from the July purchase, and 150 units from the November purchase. COGS Ending 3
4 Beg Inv = $1,000 Purchases = $22,900 (COGAS BI) COGS = The specific identification method is impractical when large quantities of similar items are stocked (Gas); appropriate when dealing with expensive unique items (Airplanes) B. First-In, First-Out (FIFO) Method: FIFO assumes that the first goods purchased (the first in) are the first goods sold (the first out) for accounting purposes only. FIFO allocates the oldest unit costs to cost of goods sold and the newest unit costs to ending inventory. You want to be consistent, based on accounting principles. Eg. Retailer Inc. provides the following information related to its merchandise inventory for 2007: Purchases: January ,800 1,800 23,900 First In - First Out (FIFO) COGS Ending Beg Inv = Purchases = COGS = C. Last-In, First-Out (LIFO) Method - LIFO assumes that the last goods purchased (the last in) are the first goods sold (the first out). LIFO allocates the newest unit costs to cost of goods sold and the oldest unit costs to ending inventory. 4
5 Eg. Retailer Inc. provides the following information related to its merchandise inventory for 2007: Purchases: January ,800 1,800 23,900 Last In - First Out (LIFO) COGS Ending Beg Inv = Purchases = COGS = D. Average Cost Method (Weighted Average Cost Method) - Average cost uses the weighted average unit cost of the goods available for sale for both cost of goods sold and ending inventory Average Cost = Cost of Goods Available for Sale Number of Available for Sale Eg. Retailer Inc. provides the following information related to its merchandise inventory for 2007: Purchases: January ,800 Average Cost = 23,900 / 1,800 = $13.28 COGS = * 1,500 units = 19, Ending = * 300 units = 3, Beg Inv = Purchases = COGS = III. When managers use FIFO, LIFO, and Average Cost 5
6 A. The reasons companies adopt different inventory cost flow methods are varied, but usually involve one of the three following factors: i. Income statement effects ii. Balance sheet effects iii. Tax Effects Beg Inv = 1,000 FIFO Purchases = 22,900 COGS = 19,300 4,600 Beg Inv = 1,000 LIFO Purchases = 22,900 COGS = 20,500 3,400 Beg Inv = 1,000 Weighted Average Purchases = 22,900 COGS = 19, , MC Example B. If costs are rising: i. FIFO has the highest inventory ii. FIFO has the lowest cost of goods sold (therefore highest Net Income) iii. FIFO has the highest taxable income C. If costs are rising: i. LIFO has the lowest inventory ii. LIFO has the highest cost of goods sold (therefore lowest Net Income) iii. LIFO has the lowest taxable income. D. Average cost always falls between FIFO and LIFO In a period of increasing prices, the inventory system that will yield the highest net income is: a. specific identification. b. FIFO. c. LIFO. d. weighted average. Consistency - Companies must consistently use one cost flow method. They can change but they must do significant disclosures so comparison to prior years may be made. 6
INVENTORIES AND COST OF SALES
Chapter 06 INVENTORIES AND COST OF SALES PowerPoint Authors: Susan Coomer Galbreath, Ph.D., CPA Charles W. Caldwell, D.B.A., CMA Jon A. Booker, Ph.D., CPA, CIA Cynthia J. Rooney, Ph.D., CPA McGraw-Hill/Irwin
More informationFinancial Accounting. John J. Wild. Sixth Edition. Copyright 2013 by The McGraw-Hill Companies, Inc. All rights reserved.
Financial Accounting John J. Wild Sixth Edition McGraw-Hill/Irwin Copyright 2013 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter 05 Reporting and Analyzing Inventories Conceptual Chapter
More informationCHAPTER 5: MERCHANDISING OPERATIONS
CHAPTER 5: MERCHANDISING OPERATIONS CHAPTER SYNOPSIS Chapter 5 first compares a service business with a merchandising business and then discusses the purchase and sale of merchandise inventory. The chapter
More informationINTERMEDIATE ACCOUNTING 321 FEB 28, 2018 TAD MILLER INVENTORY TEST
INTERMEDIATE ACCOUNTING 321 FEB 28, 2018 TAD MILLER INVENTORY TEST 03. 2182 1. WHAT S INCLUDED IN INVENTORY? The Tucson Corporation's fiscal year ends on December 31. Tucson determines inventory quantity
More informationChapter 8 Inventories: Measurement
Chapter 8 Inventories: Measurement QUESTIONS FOR REVIEW OF KEY TOPICS Question 8 1 Inventory for a manufacturing company consists of (1) raw materials, (2) work in process, and (3) finished goods. Raw
More informationCHAPTER 8. Valuation of Inventories: A Cost-Basis Approach 1, 2, 3, 4, 5, 6, 7, 8, 11, 12, 14, 15, 16
CHAPTER 8 Valuation of Inventories: A Cost-Basis Approach ASSIGNMENT CLASSIFICATION TABLE (BY TOPIC) Topics Questions Brief Exercises Exercises Problems Concepts for Analysis 1. Inventory accounts; determining
More informationPURCHASES - GROSS METHOD
INTERMEDIATE ACCOUNTING 321 MAY 21, 2016 TAD MILLER INVENTORY TEST 03. 2184 Round your answers to the nearest cent $xxx.xx PURCHASES - GROSS METHOD - PERIODIC INVENTORY SYSTEM On May 10 th Our Co. ordered
More informationChapter 9: Inventories. Raw materials and consumables Finished goods Work in Progress Variants of valuation at historical cost other valuation rules
Chapter 9: Inventories Raw materials and consumables Finished goods Work in Progress Variants of valuation at historical cost other valuation rules 1 Characteristics of Inventories belong to current assets
More informationCHAPTER 8: INVENTORY
CHAPTER 8: INVENTORY Inventory Categories Merchandise inventory - ready for sale units that are unsold at the end of the fiscal period raw materials inventory - costs assigned to goods and materials on
More informationChapter Outline. Study Objective 1 - Describe the Steps in Determining Inventory Quantities
Chapter 6 Financial Notes and BE Chapter Outline Study Objective 1 - Describe the Steps in Determining Inventory Quantities In a merchandising company, inventory consists of many different items. These
More informationPrepared by Johnny Howard 2015 South-Western, a part of Cengage Learning
Prepared by Johnny Howard 17 2 T E R M S Accounting for Inventory Physical inventory an actual counting of the merchandise on hand Perpetual inventory a running count of all inventory items, based on tracking
More informationHeintz & Parry. 20 th Edition. College Accounting
Heintz & Parry 20 th Edition College Accounting Chapter 13 Accounting for Merchandise Inventory 1 Explain the impact of merchandise inventory on the financial statements. Errors in inventory will cause
More informationFinancial Accounting Chapter 6 Notes Inventories
Financial Accounting Notes Inventories I. Management Issues Associated with Accounting with Inventory. Defining Inventory: 1. Assets held for resale purpose in a normal course of business. (Current Asset)
More informationAccounting Principles: A Business Perspective, 8e Chapter 7: Measuring and Reporting Inventories
Accounting Principles: A Business Perspective, 8e Chapter 7: Measuring and Reporting Inventories Inventories and of Goods Sold For merchandising companies, inventory is often the largest asset on the balance
More informationPREVIEW OF CHAPTER. Intermediate Accounting IFRS 2nd Edition Kieso, Weygandt, and Warfield 8-2
8-1 PREVIEW OF CHAPTER 8 Intermediate Accounting IFRS 2nd Edition Kieso, Weygandt, and Warfield 8-2 8 Valuation of Inventories: A Cost-Basis Approach LEARNING OBJECTIVES After studying this chapter, you
More informationChapter 6. Inventory Costing - Periodic
Chapter 6 Inventory Costing - Periodic Periodic Inventory Valuation a physical count of inventory is taken at the end of the fiscal year to determine how many units make up ending inventory. Throughout
More informationACCOUNTING - CLUTCH CH. 5 - INVENTORY.
!! www.clutchprep.com CONCEPT: MERCHANDISING COMPANY VS MANUFACTURING COMPANY A merchandising company has Inventory account. Merchandisers goods manufactured by others. The Inventory account might also
More informationInventories. 2. Explain the accounting for inventories and apply the inventory cost flow methods.
6-1 Chapter 6 Inventories Learning Objectives After studying this chapter, you should be able to: 1. Describe the steps in determining inventory quantities. 2. Explain the accounting for inventories and
More informationIFRS Training. IAS 2 Inventories. Professional Advisory Services
IFRS Training IAS 2 Inventories Table of Contents Section 1 Overview 2 Scope 3 Definitions 4 Measurement 5 Perpetual Versus Periodic 6 Cost Formulas 7 Net Realizable Value 8 Recognition 9 Disclosure Section
More informationCHAPTER 6 INVENTORIES SUMMARY OF QUESTIONS BY STUDY OBJECTIVES AND BLOOM S TAXONOMY. Item SO BT Item SO BT Item SO BT Item SO BT Item SO BT
CHAPTER 6 INVENTORIES SUMMARY OF QUESTIONS BY STUDY OBJECTIVES AND BLOOM S TAXONOMY Item SO BT Item SO BT Item SO BT Item SO BT Item SO BT True-False Statements 1. 1 C 8. 2 C 15. 3 K a 22. 7 C sg 29. 3
More informationCHAPTER 6. Inventories ASSIGNMENT CLASSIFICATION TABLE For Instructor Use Only 6-1. Brief. B Problems. A Problems 1, 2, 3, 4, 5
CHAPTER 6 Inventories ASSIGNMENT CLASSIFICATION TABLE Study Objectives Questions Brief Exercises Exercises A Problems B Problems 1. Describe the steps in determining inventory quantities. 1, 2, 3, 4, 5
More informationInventories Corporate Accounting Summer Professor SP Kothari. June 24, 2004
Inventories 15.511 Corporate Accounting Summer 2004 Professor SP Kothari Sloan School of Management Massachusetts Institute of Technology June 24, 2004 1 Inventory Definition: Inventory is defined as goods
More informationCEBU CPAR CENTER. M a n d a u e C I t y
Page 1 of 9 CEBU CPAR CENTER M a n d a u e C I t y AUDITING PROBLEMS AUDIT OF INVENTORIES PROBLEM NO. 1 The Pasay Company is a wholesale distributor of automobile replacement parts. Initial amounts taken
More informationCHAPTER 8. Valuation of Inventories: A Cost-Basis Approach 1, 2, 3, 4, 5, 6, 8, Perpetual vs. periodic. 2 9, 13, 14, 17, 20
CHAPTER 8 Valuation of Inventories: A Cost-Basis Approach ASSIGNMENT CLASSIFICATION TABLE (BY TOPIC) Topics Questions Brief Exercises Exercises Problems Concepts for Analysis 1. Inventory accounts; determining
More informationValuation of inventories
Valuation of inventories The sale of inventory at a price greater than total cost is the primary source of income for manufacturing and retail businesses. Inventories are asset items held for sale in the
More informationInventories DETERMINING INVENTORY ON HAND DETERMINING COST OF INVENTORY. Chapter 19. Perpetual system. Periodic system. Transfer of ownership
Chapter 19 Inventories PowerPoint presentation by Anne Abraham University of Wollongong 2009 John Wiley & Sons Australia, Ltd DETERMINING INVENTORY ON HAND Perpetual system Detailed records required Periodic
More informationC H A P T E R. Inventories. Corporate Financial Accounting 13e. human/istock/360/getty Images. Warren Reeve Duchac
C H A P T E R 6 Inventories Corporate Financial Accounting 13e Warren Reeve Duchac human/istock/360/getty Images Safeguarding Inventory (slide 1 of 2) Controls for safeguarding inventory begin as soon
More informationType of Inventory. OVERVIEW In case of manufacturing concerns. Stores and Spares. Formulae for Determining Cost of Inventory
CHAPTER 4 INVENTORIES LEARNING OUTCOMES After studying this chapter, you will be able to: Understand the meaning of term 'Inventory'. Learn the technique of Specific identification method, FIFO, Average
More information6) Items purchased for resale with a right of return must be presented separately from other inventories.
Chapter 8 Cost-based Inventories and Cost of Sales 1) Inventories are assets consisting of goods owned by the business and held for future sale or for use in the manufacture of goods for sale. Answer:
More informationChapter 6 Question Review 1
Chapter 6 Question Review 1 Chapter 6 Questions Multiple Choice 1. In a perpetual inventory system, a. LIFO cost of goods sold will be the same as in a periodic inventory system. b. average costs are based
More informationCh6 Practice Test Part 1: Multiple Choice Choose the most correct answer from the choices provided.
Part 1: Multiple Choice Choose the most correct answer from the choices provided. 1. The factor which determines whether or not goods should be included in a physical count of inventory is a. physical
More informationCHAPTER 6. Inventories 12, 13, , , 11 16, , 13
CHAPTER 6 Inventories ASSIGNMENT CLASSIFICATION TABLE Study Objectives Questions Brief Exercises Do It! Exercises A Problems B Problems 1. Describe the steps in determining inventory quantities. 1, 2,
More informationChapter 7: Merchandise Inventory
1 Chapter 7: Merchandise Inventory 2 3 Merchandise Inventory What is inventory? Items held for resale to customers Who has inventory? Wholesaler or Retailer - Merchandise Inventory Manufacturer - Raw Materials
More informationChapter 13. Auditing the Inventory Management Process
Chapter 13 Auditing the Inventory Management Process Copyright 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
More informationInventory and Cost of Goods Sold C AT EDRÁTICO U PR R I O P I EDRAS S EG. S EM
Inventory and Cost of Goods Sold E DWIN R ENÁN MALDONADO C AT EDRÁTICO U PR R I O P I EDRAS S EG. S EM. 2 017-18 Textbook: Financial Accounting, Spiceland This presentation contains information, in addition
More informationSOLUTIONS. Learning Goal 18
S1 Learning Goal 18 Multiple Choice 1. c FIFO puts the oldest costs into cost of goods sold and in a period of rising prices the oldest costs will be lowest costs. This leaves the latest and highest costs
More informationExercises. Use of purchase orders and vendors invoices, locking all high-priced items in a cabinet
Chapter 6 Inventories Study Guide Solutions Fill-in-the-Blank Equations 1. Units available for sale 2. Estimated selling price 3. Inventory turnover 4. Average daily cost of merchandise sold Exercises
More informationMGACO1 INTERMEDIATE ACCOUNTING I
MGACO1 INTERMEDIATE ACCOUNTING I S. Daga Topic: INVENTORY TEXT: Chapter 8 (excl. appendix) TEXT QUESTIONS: E8-11, E8-22, P8-3, Case IC8-1 LEARNING GOALS: 1. RECOGNITION - Understand key inventory concerns.
More informationManagement s Accountability to Stakeholders Stakeholders Provide Management is accountable for: Owners Operating activities Government Creditors
Chapter 15 Distinguish management accounting from financial accounting Management Management s Accountability to Stakeholders Stakeholders Owners Government Provide Management is accountable for: Operating
More informationStudy Guide 20. Part One Identifying Accounting Terms. Column II. Answers. Column I
Study Guide 20 Name Identifying Accounting Terms Analyzing Inventory Systems Analyzing LIFO, FIFO, and Weighted-Average Methods Total Perfect Score 9 Pts. 10 Pts. 12 Pts. 31 Pts. Your Score Part One Identifying
More informationAccounting 1 Instructor Notes
Accounting 1 Instructor Notes CHAPTER 6 ACCOUNTING FOR MERCHANDISING BUSINESS Accounting for a merchandising business is much more complex than a service business. This is because a service business sells
More informationINVENTORY VALUATION THE SIGNIFICANCE OF INVENTORY
THE SIGNIFICANCE OF INVENTORY INVENTORY VALUATION Accounting Unit 3 In the balance sheet inventory is frequently the most significant current asset. In the income statement, inventory is vital in determining
More informationAccounting 101 Class Notes Chapter 4 Accounting for Merchandising Operations
I. WHAT IS A MERCHANDISER? Merchandiser vs. Service Business Wholesaler vs. retailer This chapter changes the focus from a service-oriented business to a merchandising form of business. Merchandisers buy
More informationACCOUNTING FOR PERPETUAL AND PERIODIC INVENTORY METHODS
ACCOUNTING FOR PERPETUAL AND PERIODIC INVENTORY METHODS Key Terms and Concepts to Know Merchandise Inventory: Merchandise Inventory (Inventory or MI) refers to the goods the company has purchased and intends
More informationEliminating Standard Costing: A Step-by-Step Methodology
Eliminating Standard Costing: A Step-by-Step Methodology Nick Katko COO & CFO Tenmast Software Company Lexington, KY Workshop Agenda 1. GAAP Principles 2. Lean Inventory Valuation & GAAP Compliance 3.
More informationIAS - 02 INVENTORIES
IAS - 02 INVENTORIES Objective To prescribe the accounting treatment for inventories. Scope All inventories except: (a) (b) Financial instruments (see IAS 32 Financial Instruments: Presentation and IFRS
More informationCHAPTER 4 ACCOUNTING FOR MERCHANDISING OPERATIONS
CHAPTER 4 ACCOUNTING FOR MERCHANDISING OPERATIONS Key Terms and Concepts to Know Income Statements: Single-step income statement Multiple-step income statement Gross Margin = Gross Profit = Net Sales Cost
More informationFinancial Accounting. John J. Wild. Sixth Edition. Copyright 2013 by The McGraw-Hill Companies, Inc. All rights reserved.
Financial Accounting John J. Wild Sixth Edition McGraw-Hill/Irwin Copyright 2013 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter 04 Reporting and Analyzing Merchandising Operations Conceptual
More information1 INTRODUCTION DEFINITIONS VALUATION INVENTORY ALLOWANCE (NET REALIZABLE VALUE) REPORTING INTERNAL INVENTORY...
RAPALA INVENTORY VALUATION PRINCIPLES AND INTERNAL INVENTORY 1 INTRODUCTION... 2 2 DEFINITIONS... 2 2.1 INVENTORIES... 2 2.2 STOCK COVERAGE... 3 2.3 OBSOLETE INVENTORY... 3 2.4 NET REALIZABLE VALUE...
More informationIntermediate Accounting IFRS Edition Kieso, Weygandt, and Warfield 9-2
9-1 C H A P T E R 9 INVENTORIES: ADDITIONAL VALUATION ISSUES Intermediate Accounting IFRS Edition Kieso, Weygandt, and Warfield 9-2 Learning Objectives 1. Describe and apply the lower-of-cost-or-net realizable
More informationFinancial Accounting Chapter 5 Notes The Operating Cycle And Merchandising Operations
Financial Accounting Chapter 5 Notes The Operating Cycle And Merchandising Operations I. Management Issues in Merchandising Business Merchandising business earns income by buying and selling goods. Such
More informationCA Abhijit Sanzgiri.
CA Abhijit Sanzgiri. Inventory - idle stock of physical goods. Contains economic value. Held in various forms by an organization in its custody awaiting packing, processing, transformation. For use or
More informationAccounting 101 Chapter 5 Inventories and Cost of Sales
I. Internal Controls of Inventory Accounting 101 Inventory consists of the items a business has for resale to customers in the normal course of business. A. s included in inventory 1. of the merchandise
More informationWhite Paper. Best Practice mbas Valuation Methodology
White Paper Best Practice mbas Valuation Methodology Table of Contents 1. Introduction... 3 2. Overview... 3 3. Benefits... 8 4. Conclusion... 8 Page 2 of 8 1. Introduction Objective of this document is
More informationThese Review Notes for the CHAE Examination. Stephen M. LeBruto, Ed.D, CPA, CHAE. i Management and Technology. Rosen College of Hospitality Management
CHAE Review Basics, Inventory and Internal Controls These Review Notes for the CHAE Examination Were Prepared By: Stephen M. LeBruto, Ed.D, CPA, CHAE HFTP Professor of Hospitality Financial i Management
More informationKPI ENCYCLOPEDIA. A Comprehensive Collection of KPI Definitions for PROCUREMENT
KPI ENCYCLOPEDIA A Comprehensive Collection of KPI Definitions for PROCUREMENT www.opsdog.com info@opsdog.com 844.650.2888 Table of Contents KPI Encyclopedia Metric Definitions.............................
More informationTopic 4. Session Objectives. Inventory Adjustments. Session Objectives. Inventory
Session Objectives Topic 4 Inventory Understand the need for adjustment for inventory in preparing financial statements Describe how opening and closing inventory appears in the profit and loss accounts
More informationMERCHANDISING TRANSACTIONS: INTRODUCTION TO INVENTORIES AND CLASSIFIED INCOME STATEMENT
Learning Objectives CHAPTER 6 MERCHANDISING TRANSACTIONS: INTRODUCTION TO INVENTORIES AND CLASSIFIED INCOME STATEMENT 1. Record journal entries for sales transactions involving merchandise. 2. Describe
More informationFM038: Inventory Accounting and Costing
FM038: Inventory Accounting and Costing FM038 Rev.001 CMCT COURSE OUTLINE Page 1 of 5 Training Description: Whether you are a trader, manufacturer, contractor or a service provider, inventory has a major
More informationTOPIC 7 - IAS 2 - INVENTORIES
TOPIC 7 - IAS 2 - INVENTORIES Objective of IAS 2 to prescribe how to account for inventories. What are inventories? (a) Goods purchased for resale (b) Finished goods produced (c ) Work in progress (d)
More informationChapter 02 - Cost Concepts and Cost Allocation
Chapter 02 - Cost Concepts and Cost Allocation Student: 1. Product costs for a manufacturing company consist of direct materials, direct labor, and overhead. 2. Period cost and product cost are synonymous
More informationChapter 02 - Cost Concepts and Cost Allocation
Chapter 02 - Cost Concepts and Cost Allocation Student: 1. Product costs for a manufacturing company consist of direct materials, direct labor, and overhead. 2. Period cost and product cost are synonymous
More informationCHAPTER 6 INVENTORIES
1. The receiving report should be reconciled to the initial purchase order and the vendor s invoice before recording or paying for inventory purchases. This procedure will verify that the inventory received
More informationChapter 3 Inventory. Objectives. QuickBooks Tools for Tracking Inventory
Chapter 3 Inventory Objectives After completing this chapter, you should be able to: Activate the Inventory function (page 47). Set up Inventory Items in the Item list (page 48). Use QuickBooks to calculate
More informationThe Purchasing Function:
ACCT 100 - Intro to Acct. Chapter 8 - Accounting for Purchases, A/P, and Cash Payments Prof. Johnson Where we have been: Last time we started our discussion for merchandising entities and focused on the
More informationCOURSE DESCRIPTION. Rev 2.0 March 2017
COURSE DESCRIPTION This CE course provides information on inventory management. Information discussed includes inventory methods and accounting systems, cost of goods sold, and inventory turnovers and
More informationWeek 5. ACT102 Introduction to Accounting. Objectives 21/02/2018. What are retailing operations?
ACT102 Introduction to Accounting Week 5 Objectives Describe retailing operations, perpetual and periodic inventory systems and understand how to account for GST Account for the purchase of inventory using
More informationFFQA 1. Complied by: Mohammad Faizan Farooq Qadri Attari ACCA (Finalist) Contact:
FFQA 1 Objective of IAS 2 The objective of IAS 2 is to prescribe the accounting treatment for inventories. It provides guidance for determining the cost of inventories and for subsequently recognising
More informationProvided by Academy of Professional Accounting (APA)
Professional Accounting Education Provided by Academy of Professional Accounting (APA) CMA Part I Section A External Financial Reporting Decisions CMA Lecturer: Eric HU ACCAspace 中国 ACCA 特许公认会计师教育平台 Copyright
More informationACCT Professor Johnson Lecture Notes Chapter 16: PROCESS COSTING AND ANALYSIS
PROCESS OPERATIONS ACCT 102 - Professor Johnson Lecture Notes Chapter 16: PROCESS COSTING AND ANALYSIS In Chapter 15, we studied the job order cost accounting system used when a company manufactures products
More informationSimilarities Between Job-Order and Process Costing
Similarities Between Job-Order and Process Costing 4-1 Both systems assign material, labor, and overhead costs to products and they provide a mechanism for computing unit product costs. Both systems use
More informationB.COM 2 PRIVATE COST ACCOUNTING. B.com-2 PRIVATE Annual Examination COMPILED & SOLVED BY: Jahangeer Khan
B.COM 2 PRIVATE COST ACCOUNTING B.com-2 PRIVATE Annual Examination 20 COMPILED & SOLVED BY: Jahangeer Khan 20 Q.1: MANUFACTURING CONCERN: Consider the following information taken from the books of SAHAB
More informationWorksheet 2: Inventory Valuation and Control Study Questions
UNIVERSITY OF THE WEST INDIES Open Campus ACCT 1003 - Intro. to Cost & Management Accounting Worksheet 2: Inventory Valuation and Control Study Questions Question 1 Hyatt Magic carries an inventory of
More informationChapter 2. Job Order Costing and Analysis QUESTIONS
Chapter 2 Job Order Costing and Analysis QUESTIONS 1. Factory overhead is not identified with specific units (jobs) or batches (job lots). Therefore, to assign costs, estimates of the relation between
More informationTYPES OF COST CLASSIFICATIONS CLASSIFICATION BY BEHAVIOR
18-11 C 2 Cost TYPES OF COST CLASSIFICATIONS CLASSIFICATION BY BEHAVIOR Cost Activity Activity Cost Cost behavior refers to how a cost will react to changes in the level of business activity. Total fixed
More informationPREVIEW OF CHAPTER 9-2
9-1 PREVIEW OF CHAPTER 9 9-2 Intermediate Accounting IFRS 2nd Edition Kieso, Weygandt, and Warfield 9 Inventories: Additional Valuation Issues LEARNING OBJECTIVES After studying this chapter, you should
More informationChapter 2--Cost Terminology and Cost Behaviors
Chapter 2--Cost Terminology and Cost Behaviors TRUE/FALSE 1. A cost object is anything for which management wants to collect or accumulate costs. ANS: T PTS: 1 DIF: Easy OBJ: 2-1 2. A production plant
More informationCHAPTER 6. Inventory Costing. Brief Questions Exercises Exercises 4, 5, 6, 7 3, 4, *14 3, 4, 5, 6, *12, *13 7, 8, 9, 10, 11, 12, 13
CHAPTER 6 Inventory Costing ASSIGNMENT CLASSIFICATION TABLE Study Objectives Brief Questions Exercises Exercises Problems Set A Problems Set B 1. Describe the steps in determining inventory quantities.
More informationAkuntansi Biaya. Modul ke: 09FEB. Direct Material Cost. Fakultas. Diah Iskandar SE., M.Si dan Nurul Hidayah,SE,Ak,MSi. Program Studi Akuntansi
Modul ke: Akuntansi Biaya Direct Material Cost Fakultas 09FEB Diah Iskandar SE., M.Si dan Nurul Hidayah,SE,Ak,MSi Program Studi Akuntansi Effective Cost Control Specific assignment of duties and responsibilities.
More informationStudy Unit 10. Inventories (IAS 2)
Study Unit 10 Inventories (IAS 2) IAS 2: Inventories SUMMARY STANDARD ON A PAGE (SOAP) IAS 2 Inventories Held for sale in ordinary course of business In the process of production for such sales To be consumed
More information8. Name each of the basic inventory-related stock and flow accounts and explain their relationship to one another.
7. Understand the difference between inventoriable vs non inventoriable costs given the type of organization (merchandising vs manufacturing vs service) Inventoriable cost: cost included in the value of
More informationChapter 9 Inventories: Additional Issues
Chapter 9 Inventories: Additional Issues QUESTIONS FOR REVIEW OF KEY TOPICS Question 9 1 GAAP generally requires the use of historical cost to value assets, but a departure from cost is necessary when
More informationREPORTING AND ANALYZING INVENTORY
chapter 6 REPORTING AND ANALYZING INVENTORY the navigator Scan Study Objectives Read Feature Story Scan Preview Read Text and Answer Do it! p. 285 p. 291 p. 296 p. 298 Work Using the Decision Toolkit Review
More informationMANAGEMENT 9 ACCOUNTING
9-1 9-2 Chapter MANAGEMENT 9 ACCOUNTING A BUSINESS PARTNER To explain the three principles guiding the design of management accounting systems. LO1 Management Accounting: Basic Framework 9-3 Management
More informationIntroduction to Cost & Management Accounting ACCT 1003(MS 15B)
UNIVERSITY OF WEST INDIES OPEN CAMPUS Introduction to Cost & Management Accounting ACCT 1003(MS 15B) INVENTORY VALUATION INVENTORY VALUATION & CONTROL At the end of an accounting period, inventory/stock
More information1). Fixed cost per unit decreases when:
1). Fixed cost per unit decreases when: a. Production volume increases. b. Production volume decreases. c. Variable cost per unit decreases. d. Variable cost per unit increases. 2). Prime cost + Factory
More informationACCT323, Cost Analysis & Control H Guy Williams, 2005
Costing is a very interesting area because there are many different ways to come up with cost for something. But these principles are generally applicable across the board. Because at any point once you
More informationSupply Chain Finance
CTL.SC2x -Supply Chain Design Supply Chain Finance MIT Center for Transportation & Logistics Inventory Valua.on Methods: LIFO and FIFO 2 1 Inventory Valua.on In order to keep track of inventory, we need
More informationInventory Cost Accounting Tips and Tricks. Nick Bergamo, Senior Manager Linda Pei, Senior Manager
1 Inventory Cost Accounting Tips and Tricks Nick Bergamo, Senior Manager Linda Pei, Senior Manager 2 Disclaimer The material appearing in this presentation is for informational purposes only and is not
More informationNew cycles...same story
Instructor Michael Brownlee B.Comm(Hons),CGA Course AU1 Module 9: Inventory and property, plant, and equipment balances, production and payroll cycles, and finance and investment cycle New cycles...same
More informationFull file at
Chapter 2 Cost Concepts and Behavior rue/false Questions F 1. he cost of an item is the sacrifice made to acquire it. Answer: rue Difficulty: Simple Learning Objective: 1 F 2. A cost can either be an asset
More informationChapter 2. Job Order Costing and Analysis QUESTIONS
Chapter 2 Job Order Costing and Analysis QUESTIONS 1. Factory overhead is not identified with specific units (jobs) or batches (job lots). Therefore, to assign costs, estimates of the relation between
More informationC H A P T E R 8 VALUATION OF INVENTORIES: A COST-BASIS APPROACH
C H A P T E R 8 VALUATION OF INVENTORIES: A COST-BASIS APPROACH Inventories are: items held for sale, or goods to be used in the production of goods to be sold. Businesses with : Intermediate Accounting
More informationFull file at https://fratstock.eu
CHAPTER 2 QUESTIONS 1. The two major objectives of materials control are (1) physical control or safeguarding the materials and (2) control of the investment in materials. 2. The controls established for
More informationHorngren's Financial & Managerial Accounting, 4e (Nobles) Chapter 16 Introduction to Managerial Accounting. Learning Objective 16-1
Horngren's Financial & Managerial Accounting, 4e (Nobles) Chapter 16 Introduction to Managerial Accounting Learning Objective 16-1 1) Managerial accounting focuses on providing information for internal
More informationCHAPTER 2: ACCOUNTING FOR MATERIALS
1. An effective cost control system should include: a. An established plan of objectives and goals to be achieved. b. Regular reports showing the difference between goals and actual performance. c. Specific
More informationChapter 17. Objectives PRBA007 TOPIC TWO C. 1of 13. Unit costs for decision-making
17-0 17-1 Chapter 17 Unit costs for decision-making Objectives 17-2 Once you have completed this part of the topic, you should be able to: 1. Explain the importance of unit costs. 2. Identify the costs
More informationPROFESSOR S CLASS NOTES FOR UNIT 8 COB 241 Sections 13, 14, 15 Class on October 3, 2018
PROFESSOR S CLASS NOTES FOR UNIT 8 COB 241 Sections 13, 14, 15 Class on October 3, 2018 Acquisition Cost of Long-Term Assets A video accompanying Unit 6 introduced the concept of Acquisition Cost. To review:
More informationQUESTIONS. any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Chapter 2 Job Order Costing and Analysis QUESTIONS 1. Factory overhead is not identified with specific units (jobs) or batches (job lots). Therefore, to assign costs, estimates of the relation between
More informationFull file at QUESTIONS
Chapter 2 Job Order Costing and Analysis QUESTIONS 1. Factory overhead is not identified with specific units (jobs) or batches (job lots). Therefore, to assign costs, estimates of the relation between
More information