基础会计学 (7)

7
Costs of Merchandise Inventory
• 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
Purchases
– Methods:
• Specific Identification • FIFO • LIFO • Average Cost
9
Specific Identification
• This method is used when items:
– Are unique. – Can be directly identified with a specific
(Income Statement)
Beginning inventory + Purchases – Ending inventory = Cost of goods sold
4
Flow of Inventory Costs
Merchandiser
Merchandise Purchases
Merchandise Inventory
8
Assigning Costs to Inventory
• Management must decide on method of determining unit cost.
• This will affect both the income statement and the balance sheet.
Lesson 7 Merchandise Inventories and Cost
of Sales
Task Team of FUNDAMENTAL ACCOUNTING
School of Business, Sun Yat-sen University
Outline
• Flow of inventory cost • Items and costs of merchandising inventory • Assigning costs to inventory • Lower of cost or market • Errors in measuring inventory • Inventory estimating method
Cost of Goods Sold
Manufacturer Raw
Materials
Direct Labour
Factory Overhead
Raw Materials Work in Process Finished Goods
Inventory
Inventory
Inventory
Cost of Goods Sold
2
Introduction
• While sales and purchases are the focus of operations, inventory is no less important. Inventory costing and evaluation methods can substantially influence the bottom line. Since China’s listed companies were permitted to write down inventories in 1998, inventory has long been criticized as the “income adjustor”. Besides, inventory costing policies and the scope of inventory can also significant change the current and future years income numbers.
5
Accounting for Inventory
• Accounting for inventory requires several decisions which include:
– Items to include in cost. – Inventory System.
• Perpetual or Periodic
3
Nature of Inventory and Cost of Goods Sold
Beginning Inventory
+
Purchases for the Period
Goods Available for Sale
Ending Inventory
(Balance Sheet)
+
Cost of Goods Sold
purchase and its invoice.
Examples: Automobiles, custom furniture, art.
10
Specific Identification-Example
Specific Identificaton Computations - Perpetual Inventory System
– Costing Method. Nhomakorabea• FIFO, LIFO, Weighted Average, Specific ID
– Use of estimates.
• Gross profit method, Retail inventory method
6
Items in Merchandise Inventory
• Inventory includes all goods owned by a company and held for sale.
– Items requiring special attention:
• Goods in Transit • Goods on consignment • Obsolete or damaged goods