ACTG 211 Lecture Notes - Financial Statement, Weighted Arithmetic Mean
30 May 2018
School
Department
Course
Professor
Accounting 211 – Lecture 5 – Reporting and Analyzing
Inventories
Determining Inventory Items:
• Merchandise inventory includes all goods that a company owns and holds for sale,
regardless of where the goods are located when inventory is counted
• Items requiring special attention include:
o Goods in transit
o Goods on consignment
o Goods damaged or obsolete
Determining Inventory Costs:
• Include all expenditures necessary to bring an item to salable condition and location\
• Invoice Cost:
o Minus discounts and allowances
o Plus import tariffs
o Plus freight
o Plus insurance
o Plus storage
Internal Controls and Taking a Physical Count:
• Most companies take a physical count of inventory at least once each year
• When the physical count does not match the Merchandise Inventory account, an
adjustment must be made
Inventory Costing Under a Periodic System:
• Accounting for inventory requires several decisions
o Costing Method:
▪ Specific Identification, FIFO, LIFO, or weighted average
o Inventory System:
▪ Perpetual or Periodic
Inventory Cost Flow Assumptions:
• First-In, First-Out (FIFO) → Assumes costs flow in the order incurred, flow of goods
• Last-In, First-Out (LIFO) → Assumes costs flow in the reverse order incurred, flow of
costs
• Weighted Average → Assumes costs flow at an average of the costs available
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
Accounting 211 lecture 5 reporting and analyzing. Determining inventory items: merchandise inventory includes all goods that a company owns and holds for sale, regardless of where the goods are located when inventory is counted. Items requiring special attention include: goods in transit, goods on consignment, goods damaged or obsolete. Include all expenditures necessary to bring an item to salable condition and location\ Invoice cost: minus discounts and allowances, plus import tariffs, plus freight, plus insurance, plus storage. Internal controls and taking a physical count: most companies take a physical count of inventory at least once each year, when the physical count does not match the merchandise inventory account, an adjustment must be made. Inventory costing under a periodic system: accounting for inventory requires several decisions, costing method, specific identification, fifo, lifo, or weighted average, inventory system, perpetual or periodic. On august 14, trekking sold 8 bikes costing and 12 bikes costing .
