ADM 1340 Lecture Notes - Lecture 6: Weighted Arithmetic Mean, Perpetual Inventory, Inventory Turnover

• School: University of Ottawa
• Department: Administration
• Course: ADM 1340
• Professor: Lamia Chourou

Document Summary

Learning objectives: describe the steps in determining inventory quantities, apply the methods of cost determination, explain the financial statement effects of the inventory cost determination methods, demonstrate the presentation and analysis of inventory. Determining inventory quantities: take a physical inventory of goods on hand. All companies to determine quantity of inventory at the end of each accounting period: for companies using the perpetual inventory system, for companies using the periodic inventory system. Involves actually counting, weighing, or measuring each kind of inventory on hand. A good system of internal control minimises errors in counting inventory: determine ownership of goods. Goods in transit: should be included in the inventory of the company that has legal title to the goods on the date of count. Used when goods are not ordinarily interchangeable. Tracks the actual physical flow of goods. Normally only used in a perpetual inventory system. It reports ending inventory at its actual cost.