Accounting Principles Inventories参考.pptx

;;One Classification: Inventory ;LO 1;Physical Inventory taken for two reasons:;Involves counting, weighing, or measuring each kind of inventory on hand. Companies often “take inventory” when the business is closed or business is slow. at the end of the accounting period.;LO 1;GOODS IN TRANSIT Purchased goods not yet received. Sold goods not yet delivered.;Illustration 6-2 Terms of sale;Goods in transit should be included in the inventory of the buyer when the: public carrier accepts the goods from the seller. goods reach the buyer. terms of sale are FOB destination. terms of sale are FOB shipping point.;CONSIGNED GOODS To hold the goods of other parties and try to sell the goods for them for a fee, but without taking ownership of the goods. Many car, boat, and antique dealers sell goods on consignment, why? ;;1. Goods of $15,000 held on consignment should be deducted from the inventory count. 2. The goods of $10,000 purchased FOB shipping point should be added to the inventory count. 3. Item 3 was treated correctly. ;Inventory is accounted for at cost. Cost includes all expenditures necessary to acquire goods and place them in a condition ready for sale. Unit costs are applied to quantities to compute the total cost of the inventory and the cost of goods sold using the following costing methods: Specific identification First-in, first-out (FIFO) Last-in, first-out (LIFO) Average-cost;Illustration: Crivitz TV Company purchases three identical 50-inch TVs on different dates at costs of $700, $750, and $800. During the year Crivitz sold two sets at $1,200 each. These facts are summarized below.;If Crivitz sold the TVs it purchased on February 3 and May 22, then its cost of goods sold is $1,500 ($700 + $800), and its ending inventory is $750.;Actual physical flow costing method in which items still in inventory are specifically costed to arrive at the total cost of the ending inventory.;Illustration 6-12 Use of cost flow methods in major U.S. companies;Il