3.26 - Today’s Topic PLEASE TURN OFF CELL PHONES...

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Unformatted text preview: Today’s Topic PLEASE TURN OFF CELL PHONES Financial Accounting Information System This class will describe GAAP for: Balance Sheet: Inventory Income Statement: Cost of Goods Sold, Period Expenses Statement of Cash Flow effect Fig 176 Inventory Cost Flow Method Inventory cost flow methods pertain to the flow of costs through the accounting records, not the actual physical flow of goods. Physical flow of goods determines the number and type of items in the inventory. Cost flows are used to allocate costs between the inventory account and cost of goods sold. Fig 177 Inventory Cost Flow Methods Four Common Inventory Cost Flow Methods Specific Identification First-in, First- out (FIFO) Last-in, First- Out (LIFO) Weighted Average Fig 178 Specific Identification When a company’s inventory consists of many high-priced, low-turnover goods the record keeping necessary to use specific identification is more practical. Fig 179 Specific Identification Assume Baker Company purchased two identical inventory items: the first for $100 and the second for $110. Using specific identification, when the first item is sold, cost of goods sold would be $100. When the second item is sold, cost of goods sold would be $ 110. Fig 180 First-in, First-out The first-in, first-out cost flow method requires that the cost of the items purchased first be assigned to Cost of Goods Sold. Fig 181 First-in, First-out Assume Baker Company purchased two identical inventory items: the first for $100 and the second for $110. Using first-in, first-out, the cost assigned to the first item sold would be $100(the first cost in). The cost of goods sold assigned to the second item sold would be $110. Fig 182...
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This note was uploaded on 03/31/2008 for the course ACIS 2115 taught by Professor Jayardley during the Spring '07 term at Virginia Tech.

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3.26 - Today’s Topic PLEASE TURN OFF CELL PHONES...

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