会计学英语电子版课件06.ppt

Chapter 6Reporting and Analyzing Inventory Describe the steps in determining inventory quantities. Explain the basis of accounting for inventories and apply the inventory cost flow methods under a periodic inventory system. Explain the financial statement and tax effects of each of the inventory cost flow assumptions. Explain the lower of cost or market basis of accounting for inventories. Compute and interpret the inventory turnover ratio. Describe the LIFO reserve and explain its importance for comparing results of different companies. Inventory-Merchandiser Consists of many different items Owned by the company In a form ready for sale to customers One inventory classification: Merchandise Inventory Inventory - Manufacturing Finished goods inventory Work in process Raw materials Finished Goods Inventory Manufactured items that are complete and ready for sale. Work in Process Manufactured inventory that has been placed into production but is not yet complete. Raw Materials The basic goods that will be used in production, but have not been placed in production. Determine Inventory Quantities Determine inventory quantities by counting, weighting or measuring each type of inventory. Determine ownership of goods, including goods in transit, consigned goods. Questions Concerning Ownership Do all the goods included in the count belong to the company? Does the company own any goods not included in the count? Goods in Transit These are goods on board a truck, train, ship, or plane at the end of the period. Consigned Goods Goods of others you hold. You do not pay for the goods until they sell. The company does not take ownership. Inventory Costing - Periodic Determine quantity of units of inventory Apply unit costs to the quantities Determine total cost of inventory Determine cost of goods sold Illustrative Data – Crivitz TV Co. Inventory Costing Specific Identification method Cost Flow Assumptions FIFO- First-in, First-Out- earliest goods purcha