Chap007

Fundamentals of Financial Accounting with Annual Report

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Chapter 07 - Reporting and Interpreting Inventories and Cost of Goods Sold CHAPTER 7 REPORTING AND INTERPRETING INVENTORIES AND COST OF GOODS SOLD Student Learning Objectives and Related Assignment Materials Student Learning Objectives Mini- Exercises Exercises Coached Problems Problems (Groups Skills Development Cases Multi- chapter Material 1. Describe the issues in managing different types of inventory. 1, 2 1 3 2. Explain how to report inventory and cost of goods sold. 3, 13 1, 2, 3*, 4, 18 1, 2, 3, 4 3. Compute costs using four inventory costing methods. 4, 5, 6*, 7*, 8, 13 5*, 6, 7, 8, 9, 18 1, 4, 5 A1, B1 3, 5, 6 C7-1 + CC7† 4. Report inventory at the lower of cost or market. 9, 10 10*, 11, 12 2 A2, B2 1, 2, 3, 4, 7 5. Analyze and record inventory purchases, transportation, returns and allowances, and discounts. 11, 12, 13 13, 14, 15, 16 3 A3, B3 C7-1 + CC7† 6. Evaluate inventory management by computing and interpreting the inventory turnover ratio. 14, 15, 16 17*, 18, 19 4 A4, B4 1, 2, 3 C7-1 + CC7† Supplement 7A: FIFO, LIFO, and weighted average in a perpetual inventory system 17, 18 20, 21 5 A5, B5 Supplement 7B: The effects of errors in ending inventory 19, 20 22 6 A6, B6 Supplement 7C: Recording inventory transactions in a periodic system 23 7 A7, B7 * Animated solution included in the PowerPoint Slides. + C7-1 is a comprehensive problem that also incorporates topics from Chapters 4 (LO 2 – adjustments) and 6 (LO 6 – merchandise sales). † CC7 is a continuing case that builds on the story of Nicole’s Getaway Spa, introduced in earlier chapters. This case focuses on analyzing transactions and preparing journal entries. This case will be extended in future chapters. 7-1
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Chapter 07 - Reporting and Interpreting Inventories and Cost of Goods Sold Overview We outline the key inventory management issues facing this retailer, demonstrate its accounting practices, and use accounting information to analyze its inventory management performance. Students learn how to apply the various inventory costing, valuation, and recording methods. Inventory costing is demonstrated with examples where purchases precede sales (akin to a periodic system). Three chapter supplements are included to (A) demonstrate inventory costing in a perpetual system, (B) explain the effects of errors in the ending inventory, and (C) contrast inventory recording under periodic and perpetual systems. Synopsis of Chapter Revisions New Focus Company: American Eagle Outfitters New chapter opener Two new Self-Study Practice New visuals to demonstrate and contrast inventory costing methods New Spotlights on IFRS and an inventory valuation fraud at DHB Industries (with supporting video) Four new questions, one new exercise, six new problems, and three new cases One new comprehensive problem One new continuing case PowerPoint Slides Student Learning Objective PowerPoint® Slides 1. Describe the issues in managing different types of inventory.
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Chap007 - Chapter 07 Reporting and Interpreting Inventories and Cost of Goods Sold CHAPTER 7 REPORTING AND INTERPRETING INVENTORIES AND COST OF

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