ch08 - 8-11.Describe major classifications of...

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Unformatted text preview: 8-11.Describe major classifications of inventory.2.Perpetual vs. periodic inventory systems.3.Identify & compute effects of inventory errors on the financial statements.4.Items to include as inventory cost.5.Cost flow assumptions used to account for inventories.6.LIFO reserve.7.Understand the effect of LIFO liquidations.8.Explain the dollar-value LIFO method.9.Identify the major advantages and disadvantages of LIFO.10.Understand why companies select given inventory methods.Learning ObjectivesLearning ObjectivesLearning ObjectivesLearning Objectives8-2Inventories are:items held for sale, orgoods to be used in the production of goods to be sold.Inventory IssuesInventory IssuesInventory IssuesInventory IssuesLO 1 Identify major classifications of inventory.MerchandiserMerchandiserManufacturerManufacturerBusinesses with InventoryorClassification8-3ClassificationInventory IssuesInventory IssuesInventory IssuesInventory IssuesIllustration 8-2LO 1 Identify major classifications of inventory.8-4Inventory Cost FlowInventory IssuesInventory IssuesInventory IssuesInventory IssuesIllustration 8-3Companies use one of two types of systems for maintaining inventory records — perpetual systemor periodic system.LO 2 Distinguish between perpetual and periodic inventory systems.8-5Inventory Cost FlowInventory Cost FlowInventory Cost FlowInventory Cost FlowLO 2 Distinguish between perpetual and periodic inventory systems.Perpetual System 1.Purchases of merchandise are debited to Inventory.2.Freight-in is debited to Inventory. Purchase returns and allowances and purchase discounts are credited to Inventory.3.Cost of goods sold is debited and Inventory is credited for each sale.4.Subsidiary records show quantity and cost of each type of inventory on hand.The perpetual inventory system provides a continuous record of Inventory and Cost of Goods Sold.8-6Inventory Cost FlowInventory Cost FlowInventory Cost FlowInventory Cost FlowLO 2 Distinguish between perpetual and periodic inventory systems.Periodic System 1.Purchases of merchandise are debited to Purchases.2.Ending Inventory determined by physical count.3.Calculation of Cost of Goods Sold:Beginning inventory$ 100,000Purchases, net800,000Goods available for sale8-7Inventory ControlInventory IssuesInventory IssuesInventory IssuesInventory IssuesLO 2 Distinguish between perpetual and periodic inventory systems.All companiesneed periodic verification of the inventory records by actual count, weight, or measurement, with the counts compared with the detailed inventory records....
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This note was uploaded on 03/18/2012 for the course ACC 321 taught by Professor Staff during the Spring '08 term at Miami University.

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ch08 - 8-11.Describe major classifications of...

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