Chap7InventoryAssets〔财务报表分析,加州大学MBA〕.pptVIP

Inventory （存货） Inventory means a stock of goods that a firm owns and holds for sale (finished goods inventory成品存货) or for further processing (raw material inventory原始材料存货, and work-in-process inventory在加工存货). Manufacturing or retailing firms generate profits from selling out their inventories. What is important about accounting for inventory? A graph Inventory costing and earnings – Wal-Mart How a firm acquire inventory? Manufacture: General Motor purchases steels (raw material inventory); workers process steels and manufacture cars (finished goods inventory). Before a car is finished, it is in work-in-process inventory. Purchase: A car dealer purchases new cars from GM, put the cars in its inventory before selling them. How a manufacturing firm accumulates costs for its finished goods inventory? Our focus here is on purchased inventory. The accounting for manufactured inventory follows the same rules. In any given period, the firm starts the period with some inventory (beginning inventory, BI), it then purchases more inventory during the period (new purchases), and sells some inventory (sales). The firm ends the year with some inventory (ending inventory, EI). The costs (the total amount of money used to purchase) of sold inventory is called cost of goods sold (COGS) Inventory equation In terms of number of units Beginning inventory + new purchases – sales = Ending inventory In terms of dollar amounts Beginning inventory + new purchases – COGS = Ending inventory Timing of Computation of COGS Periodic Inventory System Timing of Computation of COGS-2 Perpetual inventory system Comparisons of the two system Inventory costing methods(*from now on, we focus on periodic inventory system) The main difficulty in costing inventory is that the same products in inventory purchased at different time cost differently. Inventory costing methods-Goods available for sale Inventory costing method: FIFO, first-in, first-out Inventory costing method: LIFO, Last-in, f