Accounting Chapter 6

Accounting Chapter 6 - Click to edit Master subtitle style...

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Unformatted text preview: Click to edit Master subtitle style CHAPTER 6 Reporting and Analyzing Inventory Inventory Generally a merchandisers largest asset Companies want to minimize the amount of inventory they hold Inventory can greatly control a companys profitability Inventory Merchandisers One Account called Merchandise Inventory Manufacturers Three Accounts: Raw Materials Work in Process (WIP) Finished Goods Just-In-Time Inventory Companies order inventory only when it is needed Reduces inventory costs on the books Must be integrated with suppliers Must be able to produce items quickly Subject to labor stoppages, production bottlenecks, disasters, etc. Inventory Control Bar codes are the norm in inventory control Wal-Mart goes one step further with electronic product codes (EPCs) Allow individual boxes to be tracked, not just by product Taking Physical Inventory Involves physically counting the inventory on hand Done at least annually For perpetual inventory, counts are made to Check accuracy of inventory records Determine amount lost to spoilage, damage, or theft Taking Physical Inventory Imagine the task for Wal-Mart or Target Usually done during slow periods of business and at night Fraud can be carried out due to the difficulty of tracking / verifying inventory Goods in Process Inventory is included in the records of the company who has legal title FOB Shipping Point Title passes to the buyer when the public carrier accepts the goods from the seller FOB Destination Title passes when the goods reach the buyer Consignment Inventory is placed with a third party to help sell the item for a fee...
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Accounting Chapter 6 - Click to edit Master subtitle style...

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