CHAPTER 7 LLS

CHAPTER 7 LLS - CHAPTER 7 BI +Purch. GAS -EI COGS Purch +F....

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CHAPTER 7 – A. Inventory Costing Methods 1. Specific Identification a. tracks the specific items sold and on hand. used for high cost items 2. (FIFO) a. First in first out. Assume sales start in Beginning Inventory layer. Old stuff sold first. 3. (LIFO) a. Last in first out. Assume sales start w/ most recent purch. layer. New stuff sold first. i. ALLOWS FOR INCOME MANIPULATION FIFO LIFO COGS: TOP COGS: BOTTOM EI: BOTTOM EI: TOP BOTTOM LAYER = MOST RECENT PURCH = CURRENT COST 4. Average Cost Method a. Uses the weighted average unit cost of the goods available for sale for both cost of goods sold and ending inventory. (units) sale for available Quantity (dollars) sale for available goods of Cost unit per cost Average = results between the FIFO and LIFO B. Financial Statement Effects of Inventory Methods 1 Sales -COGS Gross Profit -Op. Exp Net Income BI +Purch. GAS -EI COGS Sales -S. RAD Net Sales Purch +F. In -P. RAD Net Purch BRE +NI -D ERE F. out=op. expense F. in=part of net purchases Op. exp are all expenses except COGS
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This note was uploaded on 11/15/2010 for the course ACCT 229 taught by Professor Strawser during the Fall '06 term at Texas A&M.

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CHAPTER 7 LLS - CHAPTER 7 BI +Purch. GAS -EI COGS Purch +F....

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