Accounting for inventories
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Accounting for inventories

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Kê toán hàng tòn kho

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Accounting for inventories Accounting for inventories Document Transcript

  • Accounting for Inventories http://accountinginfo.com/study/inventory/inventory-121.htm Accounting Study Guide U.S. GAAP IFRS, IAS Accounting Topics Comparison of Inventory Valuation Methods U.S. GAAP Codification, Accounting Standards ASC, International Financial Reporting Standards (IFRS) U.S. GAAP by Topic, Accounting by Topic, Securities Law Library Inventory Valuation Methods First-in First-out (FIFO) Last-in First-out (LIFO) Moving Average Method Weighted Average Method Dollar Value LIFO FIFO, LIFO, Perpetual, Periodic Under FIFO, it is assumed that items purchased first are sold first. Under LIFO, it is assumed that items purchased last are sold first. Perpetual inventory system updates inventory accounts after each purchase or sale. Periodic inventory system records inventory purchase or sale in "Purchases" account. "Purchases" account is updated continuously, however, "Inventory" account is updated on a periodic basis, at the end of each accounting period (e.g., monthly, quarterly) Example 1 (Company A) Inventory transactions in May 2010. Units Purchased Date Transactions Unit Cost Inventory Units (Sold) May 1 Beginning Inventory 700 $10 700 May 3 Purchase 100 $12 800 May 8 Sale (500) ?? 300 May 15 Purchase 600 $14 900 May 19 Purchase 200 $15 1,100 May 25 Sale (400) ?? 700 May 27 Sale (100) ?? 600 May 31 Ending Inventory ?? Ending Inventory = Beginning Inventory + Units Purchased - Units Sold = 700 + 900 - 1,000 = 600 units Click here for calculations of cost of goods sold and cost of ending inventory under various inventory valuation methods. Finance&Accounting Degree Study Finance and Accounting, Top Masters Degree, London, UK www.LSBF.org.uk/Finance 1 of 4 01/09/2010 9:11 AM
  • Accounting for Inventories http://accountinginfo.com/study/inventory/inventory-121.htm Comparison of FIFO and LIFO FIFO vs. LIFO Beginning inventory + Cost of goods sold Cost of ending inventory Purchases FIFO, Perpetual $11,000 $8,600 $19,600 LIFO, Perpetual $12,400 $7,200 $19,600 FIFO, Periodic $11,000 $8,600 $19,600 LIFO, Periodic $13,600 $6,000 $19,600 Moving average, Perpetual $11,705 $7,895 $19,600 Weighted average, Periodic $12,250 $7,350 $19,600 Example 1 shows that per unit purchase cost increases continuously throughout the period ($10 --> $12 --> $14 --> $15). FIFO assumes that items purchased FIRST are sold FIRST. --> Cost of old purchase is recorded as cost of goods sold. --> Cost of recent purchases is recorded as cost of ending inventory. --> When price goes up, old price is lower than recent price. --> Cost of goods sold is lower for FIFO. ($11,000 < $12,400) --> Cost of ending inventory is higher for FIFO. ($8,600 > $7,200) LIFO assumes that items purchased LAST are sold FIRST. --> Cost of recent purchase is recorded as cost of goods sold. --> Cost of old purchases is recorded as cost of ending inventory. --> When price goes up, recent price is higher than old price. --> Cost of goods sold is higher for LIFO. ($12,400 > $11,000) --> Cost of ending inventory is lower for LIFO. ($7,200 < $8,600) FIFO, Perpetual Cost of Goods Sold = FIFO, Periodic Cost of Goods Sold ($11,000 = $11,000) FIFO, Perpetual Inventory Cost = FIFO, Periodic Inventory Cost ($8,600 = $8,600) LIFO, Perpetual Cost of Goods Sold < LIFO, Periodic Cost of Goods Sold ($12,400 < $13,600) LIFO, Perpetual Inventory Cost > LIFO, Periodic Inventory Cost ($7,200 > $6,000) Moving average, Perpetual Cost of Goods Sold < Weighted average, Periodic Cost of Goods Sold ($11,750 < $12,250) Moving average, Perpetual Inventory Cost > Weighted average, Periodic Inventory Cost ($7,895 > $7,350) Click here for calculations of cost of goods sold and cost of ending inventory under various inventory valuation methods. 2 of 4 01/09/2010 9:11 AM
  • Accounting for Inventories http://accountinginfo.com/study/inventory/inventory-121.htm Get Inventory Management Use Free software evaluation tool. Compare top 40 inventory systems! SoftwareResearchTools.com/Inventory Genesis Inventory Systems Lean supply chain management system Reduce your costs by 30% www.genesisvmi.com Titan Water Heaters We have a wide selection of Titan water heaters along with others! www.centuryplumbing.com www.harmonyretail.com.au Ads by Google Example 1-1 (Perpetual Recording, FIFO Valuation) FIFO valuation under perpetual inventory system Cost of goods sold = $11,000 Cost of ending inventory = $8,600 Example 1-2 (Perpetual Recording, LIFO Valuation) LIFO valuation under perpetual inventory system Cost of goods sold = $12,400 Cost of ending inventory = $7,200 Example 1-3 (Periodic Recording, FIFO Valuation) FIFO valuation under periodic inventory system Cost of goods sold = $11,000 Cost of ending inventory = $8,600 Example 1-4 (Periodic Recording, LIFO Valuation) LIFO valuation under periodic inventory system Cost of goods sold = $13,600 Cost of ending inventory = $6,000 Example 1-5 (Perpetual Recording, Moving Average Valuation) Moving Average valuation under perpetual inventory system Cost of goods sold = $11,705 Cost of ending inventory = $7,895 Example 1-6 (Periodic Recording, Weighted Average Valuation) Weighted Average valuation under periodic inventory system Cost of goods sold = $12,250 Cost of ending inventory = $7,350 Dollar Value LIFO Dollar Value LIFO valuation method 3 of 4 01/09/2010 9:11 AM
  • Accounting for Inventories http://accountinginfo.com/study/inventory/inventory-121.htm GAAP & CPA Exam Resources from Amazon.com WILEY Interpretation and Wiley GAAP 2010 Wiley CPA Exam Review 2010, Application... Barry J. Epstein, ... 4-volume... Barry J. Epstein, ... New $162.51 Patrick R. Delaney... New $207.59 Best $119.95 New $138.60 Best $191.62 Best $126.56 Privacy Information Copyright © 1999-2010 by CPAclass.com.TM All Rights Reserved. 4 of 4 01/09/2010 9:11 AM