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Related Flashcards
Related Topics
Cards In This Set
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Merchandise Inventory
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Includes all goods that a company owns and holds for sale, regardless of where the goods are located when inventory is counted.
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Items in merchandise inventory that need special attention include...
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-Goods in transit
-goods in consignment
-goods damaged or absolete
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Formula to determine Invoice cost
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-Discounts and Allowances
+Import duties
+Freight
+Storage
+Insurance
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Costing Method
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Specific Identification, FIFO, LIFO, or Weighted Average
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Inventory System
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Perpetual or Periodic
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FIFO
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(First in-First out)
Assumes costs flow in the order incurred.
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LIFO
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(Last in-First out)
Assumes costs flow in the reverse order incurred.
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Weighted Average
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Assumes costs flow at an average of the costs available.
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The Internal Revenue Service (IRS)
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Identifies several acceptable methods for inventory costing for reporting taxable income.
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Consistency concept
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Requires a company to use the same accounting methods period after period so that financial statements are comparable across periods.
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Inventory must be reported at market value when market is ______ than cost.
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Lower
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Replacement costs can be applied which three ways?
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(1) separately to each individual item.
(2) to major categories of assets.
(3) to the whole inventory.
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Understating ending inventory
(Income Statement)
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Overstates Cost of Goods Sold and understates Net Income.
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Understating beginning inventory
(Income Statement)
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Understates Cost of Goods Sold and Overstates Net Income.
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Overstating ending Inventory
(Income Statement)
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Understates Cost of Goods Sold and Overstates Net Income.
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