ch 9 Inventory

ch 9 Inventory - 9-1Ch 9 Inventory and Cost of Goods...

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Unformatted text preview: 9-1Ch 9 Inventory and Cost of Goods SoldLearning Objectives1.Define inventory for a merchandising business, and identify the different types of inventory for a manufacturing business.2.Explain the periodic and perpetual inventory systems.3.Use the four basic inventory valuation methods: specific identification, average cost, FIFO, and LIFO.4.Choose an inventory valuation method based on the trade-offs among income tax effects and the impact on the financial statements.(continues)9-2Learning Objectives1.Apply the lower-of-cost-or-market (LCM) rule to reflect declines in the market value of inventory.2.Use the gross profit method to estimate ending inventory.3.Determine the financial statement impact of inventory recording errors. 4.Analyze inventory using financial ratios, and properly compare ratios of different firms after adjusting for differences in inventory valuation methods.5.Compute estimates at FIFO, LIFO, average cost, and lower-of-cost-or-market inventory using the retail inventory method.9-3Define inventory for a merchandising business and identify the different types of inventory for a manufacturing business.OBJECTIVE 19-4What Is Inventory?•Inventory designates goods held for sale in the normal course of business or, for a manufacturer, also includes goods in production.•For a manufacturing firm, a broad array of production costs is included as part of the cost of inventory. •The terms raw materials, work in process, and finished goods refer to the inventories of a manufacturing enterprise.9-5Manufacturing Business•Work in Process (WIP) consists of materials partly processed and requiring further work before they can be sold.•Work in Process includes three cost elements:1.Direct materials refers the cost of materials directly identified with goods in production.2.Direct labor refers to the cost of labor directly identified with goods in production.3.Manufacturing overhead refers to the portion of factory overhead assignable to goods in production....
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This note was uploaded on 12/07/2009 for the course ACCT ACCT 203 taught by Professor Kim during the Fall '09 term at HKUST.

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ch 9 Inventory - 9-1Ch 9 Inventory and Cost of Goods...

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