ACC E113 Lecture Notes - Lecture 6: Product Type, Parking Lot, Inventory Turnover
Document Summary
Estimating ending inventory: need for information vs. time required, gross profit method. Sales x gross profit % = estimated gp. Net change in inventory & cogs: vertical analysis. Cogs / average inventory: days in inventory. 365 / inventory turnover: product type (long shelf2life vs. short shelf2life) relative to turnover ratio. Inventories and cash flows: acquisitions use cash2 investing activities, sales provide cash2 investing activities, use of lifo can reduce cash flow by deferring taxes. Lifo reserve: lifo sometimes yields significantly different results than fifo. Increases over time: lifo users must disclose the amount their inventory would. % used in normal operations of the business. % cost = all expenses necessary to acquire and make an asset ready to use. % fmv of asset received or given up, whichever is more clearly determinable. % cost becomes the basis for accounting for the asset over its useful life. Building site for office or manufacturing plant.
