inventory cost methods - 6-1 Inventory There are 2 Inventory systems that could be used by the business Perpetual Sys 1 Inventory's account should be

inventory cost methods - 6-1 Inventory There are 2...

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6 - 1 Inventory There are 2 Inventory systems that could be used by the business Periodic Sys Periodic Sys Perpetual Sys Perpetual Sys 1. Inventory's account should be updated after each Sales or Purchase transaction 2. The Cost of Goods Sold should be calculated and recorded after each Sales transaction. 1. No update to inventory account during the accounting period. A physical count should be made at the End of Accounting period. 2. The Cost of Goods Sold is calculated at the End of period.
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6 - 2 Any kind of business, (uses perpetual or periodic system), has to take a Physical Count for its inventory at the End of each accounting period. In Periodic Sys In Periodic Sys In Perpetual Sys In Perpetual Sys reasons for taking a physical count of inventory 1. Check the accuracy of inventory record 2. Determine amount of inventory lost , if any. 1. Determine the amount of Ending Inventory 2. Determine the COGS
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Slide 4-3 Inventory Costing Inventory Costing Methods
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6 - 4 Inventory Costing Methods There are main 3 methods for computing the cost of Ending Inventory 1. First-in, First-out (FIFO) 2. Last-in, First-out (LIFO) 3. Average-cost (WA) 1. First-in, First-out (FIFO) 2. Last-in, First-out (LIFO) 3. Average-cost (WA)
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6 - 5 INVENTORY COST FLOW ASSUMPTIONS INVENTORY COST FLOW ASSUMPTIONS First-In, First-Out (FIFO) Assumes costs flow in the order incurred. Last-In, First-Out (LIFO) Assumes costs flow in the reverse order incurred.
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  • Fall '16
  • taher refaat
  • Accounting, wA, Periodic Sys

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