Beruflich Dokumente
Kultur Dokumente
Chapter
Chapter 8-1
Merchandiser
or
Manufacturer
Chapter 8-2
Chapter 8-3
3. Cost of goods sold is debited and Inventory is 4. Physical count done to verify Inventory balance.
The perpetual inventory system provides a continuous record of Inventory and Cost of Goods Sold.
Chapter 8-4
Beginning inventory Purchases, net Goods available for sale Ending inventory Cost of goods sold
Chapter 8-5
vs.
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Periodic System
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Chapter 8-7
Chapter 8-8
Chapter 8-10
Chapter 8-11
Chapter 8-12
Net Method
Average Cost
Specific Identification
Method adopted should be one that most clearly reflects periodic income.
Chapter 8-14
1. Assuming the Perpetual and Periodic Inventory Method, compute the Cost of Goods Sold and Ending Inventory under FIFO, LIFO, and Average cost. 2. See refresher material posted on WebCT
Chapter 8-15
Consequences
Future demand may not be met Can lead to higher tax expense
Disclosure requirements
Material differences in income due to liquidation must be disclosed
Chapter 8-16
Chapter 8-18
Chapter 8-19
Companies should disclose either the LIFO reserve or the replacement cost of the inventory.
Chapter 8-21
A better way (not usually possible) is to use LIFO numbers for income related ratios and FIFO numbers for balance sheet ratios
Chapter 8-22
The effect of an error on net income in one year (2006) will normally be counterbalanced in the next (2007), however the income statement will be misstated for both years.
Chapter 8-23