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This book is licensed under a Creative Commons Attribution 3.0 License7.Measuring and reporting inventoriesLearning objectivesAfter studying this chapter, you should be able to:•Explain and calculate the effects of inventory errors on certain financial statement items.•Indicate which costs are properly included in inventory.•Calculate cost of ending inventory and cost of goods sold under the four major inventory costing methods using periodic and perpetual inventory procedures.•Explain the advantages and disadvantages of the four major inventory costing methods.•Record merchandise transactions under perpetual inventory procedure.•Apply net realizable value and the lower-of-cost-or-market method of inventory.•Estimate cost of ending inventory using the gross margin and retail inventory methods.•Analyze and use the financial results- inventory turnover ratio.Choosing an accounting careerChapter 7 discusses how companies have a choice in inventory cost methods between specificidentification, FIFO, LIFO, and weighted-average. Similarly, one of the greatest benefits ofobtaining an accounting degree is the broad range of career choices available. There are over 40different types of accounting jobs available in public accounting, private industry, and governmentalaccounting.Forexample,checkoutthelistofaccountingjobsat:careertitles.One of the primary reasons many students go into accounting is successful job placement.Accounting majors have been better able to find positions than majors in any of the other businessoptions, with the possible exception of management information systems (MIS). Even the relativedemand for MIS majors has diminished recently, while the demand for accounting majors remainsstrong. We are currently experiencing a shortage of accounting majors across the nation. Anotherimportant factor to keep in mind regarding job placement is where you would like to be three tofive years from now. Accounting offers an excellent foundation with opportunities for advancement,whereby many accounting graduates make double their entry-level salary in only five years.Many students pursue an accounting degree because it does not restrict their careeropportunities as much as having a different business degree. For example, with an accountingdegree, a student can apply for positions in management, marketing, and finance, as well asaccounting. In fact, many recruiters in business favor accounting graduates because they recognizean accounting degree as a more difficult business degree to obtain. However, management,marketing, and finance students cannot apply for accounting positions because they lack necessaryaccounting coursework. In fact, with some additional courses in systems, an accounting major iswell equipped to pursue a career in any business field including information systems.