BUSI 2160U Chapter Notes - Chapter 7: Balance Sheet, Financial Statement
Document Summary
Lo 1 understand the nature, purpose and importance of inventory to an entity. Lo 2 distinguish between the perpetual and periodic methods of inventory control. Lo 3 distinguish among the different cost formulas used to account for inventory and cost of sales, and understand the impact the different cost formulas have on the amounts reported in the financial statements. Lo 4 explain the lower of cost and market rule. Lo 5 recognize the issues, choices and effects on the financial statements of using market values instead of cost for valuing inventory. Lo6 discuss the relationship between inventory accounting policy and income tax. Lo7 analyze and interpret inventory information in financial statements. Useful cash is something that generates revenue. Too much cash, low interest rate = dead weight money. Inventory: goods available for sale, production, &materials used in supplying service. Manufacturer: raw material, work in process, finished goods. Balance sheet values are from most recent purchases.
