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This book is licensed under a Creative Commons Attribution 3.0 License 7. Measuring and reporting inventories Learning objectives After 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 career Chapter 7 discusses how companies have a choice in inventory cost methods between specific identification, FIFO, LIFO, and weighted-average. Similarly, one of the greatest benefits of obtaining an accounting degree is the broad range of career choices available. There are over 40 different types of accounting jobs available in public accounting, private industry, and governmental accounting. For example, check out the list of accounting jobs at: 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 business options, with the possible exception of management information systems (MIS). Even the relative demand for MIS majors has diminished recently, while the demand for accounting majors remains strong. We are currently experiencing a shortage of accounting majors across the nation. Another important factor to keep in mind regarding job placement is where you would like to be three to five 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 career opportunities as much as having a different business degree. For example, with an accounting degree, a student can apply for positions in management, marketing, and finance, as well as accounting. In fact, many recruiters in business favor accounting graduates because they recognize an accounting degree as a more difficult business degree to obtain. However, management, marketing, and finance students cannot apply for accounting positions because they lack necessary accounting coursework. In fact, with some additional courses in systems, an accounting major is well equipped to pursue a career in any business field including information systems.

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