Summary of Study Objectives

Summary of Study Objectives - the farthest from current...

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Summary of Study Objectives 1 Describe the steps in determining inventory quantities. inventory of goods on hand and (2) determine the ownership consignment. 2 Explain the basis of accounting for inventories and apply methods under a periodic inventory system. inventories is cost. Cost includes all expenditures necessary to them in a condition ready for sale. Cost of goods available fo beginning inventory and (b) cost of goods purchased. The inv specific identification and three assumed cost flow methods— cost. 3 Explain the financial statement and tax effects of each of t assumptions. The cost of goods available for sale may be allo and ending inventory by specific identification or by a metho flow. When prices are rising, the first-in, first-out (FIFO) met goods sold and higher net income than the average cost and th methods. The reverse is true when prices are falling. In the ba an ending inventory that is closest to current value, whereas t
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Unformatted text preview: the farthest from current value. LIFO results in the lowest inc taxable income). 4 Explain the lower-of-cost-or-market basis of accounting fo use the lower-of-cost-or-market (LCM) basis when the curren less than cost. Under LCM, companies recognize the loss in t decline occurs. 5 Compute and interpret the inventory turnover ratio. calculated as cost of goods sold divided by average inventory average days in inventory by dividing 365 days by the invent turnover ratio or lower average days in inventory suggests tha keep inventory levels low relative to its sales level. 6 Describe the LIFO reserve and explain its importance for different companies. The LIFO reserve represents the differe inventory using LIFO and ending inventory if FIFO were emp companies this difference can be significant, and ignoring it c conclusions when using the current ratio or inventory turnove...
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Summary of Study Objectives - the farthest from current...

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