Chapter 11会计英语.ppt

The Basic Concept of Inventory Accounting Inventory Accounting System Calculating the Cost of Inventory Valuation of Inventory at Other than Cost Estimating Inventory Cost Explain the basic concept of inventory. Understand the two inventory accounting systems: the periodic system and the perpetual system. Identify the three inventory costing methods: FIFO Method, LIFO Method and Average Cost Method. Compute the proper valuation of inventory at other than cost. Estimate the cost of inventory by using the retail method and the gross profit method. * * Chapter 11 Accounting for Inventory Outline of Chapter 11 11.1 The Basic Concept of Inventory Accounting What is the inventory? (1) Merchandise held for sale in the normal process of business (2) Materials in the process of production or held for such use. Characteristics: (1)It is owned by the company (2)It is in a form ready for sale in the ordinary course of business. Auditors must ensure that the inventory dollar amount disclosed in the financial statement is determined using generally accepted accounting principles and reflects the value of the inventories actually owned. 11.2 Inventory Accounting System ‘Taking an inventory’ consists of: (1) counting the items involved; (2) pricing each item; (3) summing the amounts of each item. Two methods are used to record and carry inventory on the books: (1)the Periodic System (2) the Perpetual System The perpetual and Periodic Methods Inventory 3,500(3) Ending balance Inventory - 4,500 Inventory (end) +3,500(4) Cost of good sold +1,000 (no journal entry required) December 31:books are closed and financial statement are prepared ending balance Inventory 1,000(2) (no entry recorded to reflect outflow of inventory) Cost of good sold 1,000 Sale 1,500 Sales Revenue +1,500 Cash +1,500 Cash +1,500 Dece