Warren_23e__AISE_IM_Ch07 - chapter 7 Inventories OPENING...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
chapter 7 Inventories OPENING COMMENTS Chapter 7 comprehensively covers the topic of inventories, including the effects of inventory errors, internal controls, inventory costing methods, lower-of-cost-or-market adjustments, and estimating inventory. The inventory costing methods are presented both for the perpetual and periodic inventory systems. Since Chapter 6, “Accounting for Merchandising Businesses,” emphasized the perpetual inventory system, you will need to treat this chapter as if it were your students’ first significant exposure to the periodic inventory system. After studying the chapter, your students should be able to: 1. Describe the importance of control over inventory. 2. Describe three inventory cost flow assumptions and how they impact the income statement and balance sheet. 3. Determine the cost of inventory under the perpetual inventory system using the FIFO, LIFO, and average cost methods. 4. Determine the cost of inventory under a periodic inventory system using the FIFO, LIFO, and average cost methods. 5. Compare and contrast the use of the three inventory costing methods. 6. Describe and illustrate the reporting of merchandise inventory in the financial statements. STUDENT FAQS Why do we have choices of inventory methods instead of just using one all the time? It just makes it harder. Which inventory method is the best? 99 This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. This may not be resold, copied, or distributed without the prior consent of the publisher.
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
100 Chapter 7 Inventories This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. This may not be resold, copied, or distributed without the prior consent of the publisher. Which method is used the most? Why can’t we switch methods each month? Are property taxes paid on inventory in most states? If cost of goods sold goes up, does gross profit always go down? Do you know what percent of people in the workforce work with inventory on a daily basis? By having different inventory methods that result in different cost of goods sold and gross profit, aren’t you encouraging “playing with the numbers”? Why wouldn’t a company always select the inventory method that resulted in the highest net income, so the business looks good? What is the difference between the “physical flow of goods” and the “flow of costs” through a company? Wouldn’t a company have to use the inventory method that best matches the actual physical flow of goods? IN-CLASS AND HOMEWORK ASSIGNMENT CHART Number Objective Description Difficulty Time AACSB AICPA SS GL EO7-1 7-1 Easy 5 min Analytic FN-Measurement EO7-2 7-1 Easy 5 min Analytic FN-Measurement EO7-3 7-1 Easy 5 min Analytic FN-Measurement EO7-4 7-1 Easy 5 min Analytic FN-Measurement EO7-5 7-2 Easy 5 min Analytic FN-Measurement EO7-6 7-2 Easy 5 min Analytic
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 18

Warren_23e__AISE_IM_Ch07 - chapter 7 Inventories OPENING...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online