{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

chap 6 notes - 2 FIFO(first in first out)= oldest goods...

Info icon This preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
Classifying inventory: 1. Merchandising company a. Only have merchandising inventory 2. manufacturing company a. finished goods b. work in progress c. raw materials Just in time (JIT) method= make and sell your inventory quick =storage costs are low Determining ownership of goods : 1. goods in transit= goods in travel at end of acct. period a. FOB shipping point= ownership passes to buyer upon UPS picking it up from seller b. FOB destination= ownership passes to buyer when they receive the product 2. Consigned goods= goods held by someone else who tries to sell them and charges a fee to actual owner of goods when sold Inventory costing : 1. Specific ID method: assign a specific cost to a specific good and when sold, COGS is affected by the specific price of the good a. Need serial #s, bar codes, vin #s, or crazy ass scanning technology
Image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: 2. FIFO(first in first out)= oldest goods purchased are first to be sold 3. LIFO(last in first out)= newest goods purchased are first to be sold 4. Average cost= uses avg weighted cost Income statement effects : (Assuming inflation) 1. FIFO=highest NI a. Some profit is referred to as “phantom profit” because profit is overstated 2. LIFO=lowest NI a. Most accurate revenue b. LOWER INCOME TAXES 3. Average= middle NI Balance sheet effects : 1. FIFO= accurate 2. LIFO= understated-When value of inventory is lower than cost, they can write down its market value instead-AKA: Lower of cost or market (LCM) “market”=current replacement cost LIFO reserve: =when companies use LIFO they must report the amount that inventory would increase if the company was using FIFO...
View Full Document

  • Winter '08
  • WAKER
  • Lower income taxes, FOB destination= ownership, Consigned goods= goods, Average= middle NI, Specific ID method

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern