Lecture%204-5%20PI_st%20%5bB%26W%5d

Lecture%204-5%20PI_st%20%5bB%26W%5d - Week 4-5 P W k 4 5...

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Week 4-5 Part I Inventories
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2 bjectives low of inventory cost Objectives 1. Flow of inventory cost. 2. Inventory system 3. Determine the cost of inventory. 4. Cost flow assumption 5. Issues different cost flow assumption nderstand dollar lue LIFO 6. Understand dollar-value LIFO. 7. Disclosures of inventory.
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Flow of inventory 3 1. Flow of inventory ± Inventory: Inventories are the assets of a company which are (1) held for sale in the ordinary course of business, (2) in the process of production for sale, or (3) held for use in the dt i f d i t b d production of goods or services to be made available for sale. ± Classification: Merchandising company: Merchandise Inventory Manufacturing company: Raw material; Work-in- process inventory; Finished Inventory
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4 erchandising Company 1. Flow of ventory Merchandising Company Inventory Costs Manufacturing Company
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5 low of Inventory Costs Flow of Inventory Costs Merchandising Company Cost of Goods Sold Accounts Payable (or Cash) Merchandise ventory Inventory Goods h d Goods ld Purchased Sold
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6 low of Inventory Costs Flow of Inventory Costs Manufacturing Company Accounts Payable (or Cash) Raw Materials Inventory k () To Work in Process ventory Materials h d Materials d i Inventory Purchased Used in Production Continued
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7 low of Inventory Costs Flow of Inventory Costs irect Labor Manufacturing Company Direct Labor Actual Direct To Work in Process Labor anufacturing Labor Charged to Production Inventory Manufacturing (Factory) Overhead o ork Actual Mfg. ver in Process nventory Over- head Overhead Applied to Production ve to y Continued
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8 low of Inventory Costs Flow of Inventory Costs Manufacturing Company Work in Process Inventory Finished Goods Inventory Materials Used Direct Labor Overhead Applied Goods Finished anufactured) (Manufactured) Goods Sold to Cost of Goods Sold
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9 2. Two Inventory system
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10 lternative Inventory Systems Alternative Inventory Systems A company using a perpetual system maintains a continuous cord of the physical quantities in record of the physical quantities in its inventory.
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11 lternative Inventory Systems Alternative Inventory Systems A company using a periodic ystem oes not aintain a system does not maintain a continuous record of the physical quantities of inventory on hand.
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12 omparison of Systems Comparison of Systems Perpetual Inventory System Periodic Inventory System Beginning Inventory Beginning Inventory + Purchases (net) oods Sold + Purchases (net) nding Inventory Goods Sold = Ending Inventory Ending Inventory = Goods Sold
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13 omputation of Net Purchases Computation of Net Purchases Purchases + Freight-in – Purchases Returns and llowances Allowances – Purchases Discounts Taken tP h = Net Purchases
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When should inventory be 14 recognized?
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This note was uploaded on 02/04/2012 for the course ACCT 3111 taught by Professor Zhang during the Spring '11 term at CUHK.

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Lecture%204-5%20PI_st%20%5bB%26W%5d - Week 4-5 P W k 4 5...

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