中南财经政法大学：《中级会计学 Intermediate Accounting》课程电子教案（PPT课件讲稿，英文版）Chapter 7 Inventories

iNventories ntermediate Accounting Accounting School. Zhongnan

7 Inventories Accounting School ·Zhongnan University of Economics & Law ntermediate Accounting I 中级会计学

1. Classifications of inventory Inventories are the assets of a company which are held for sale in the ordinary course of business in the process of production for sale, or held for use in the production of goods or services to be made available for sale

1. Classifications of inventory Intermediate Accounting 7 Inventories Inventories are the assets of a company which are : ➢ held for sale in the ordinary course of business, ➢ in the process of production for sale, or ➢ held for use in the production of goods or services to be made available for sale

Inventory Types Income Balance sheet items Statement Items Cost of Retailer Merchandise Sale Goods Sold Manufacturer Raw Work in Finished Cost of Materials Process G Goods sold Direct Overhead Sale Labor

Merchandise Balance Sheet Items Income Statement Items Retailer Cost of Sale Goods Sold Manufacturer Raw Materials Cost of Goods Sold Sale Finished Goods Work in Process Direct Overhead Labor Intermediate Accounting 7 Inventories Inventory Types

2. Alternative inventory systems a company using the periodic inventory system does not maintain a continuous record of the physical quantities(or costs) of inventory on hand a perpetual inventory system provides for a continuous record of physical quantities in the inventory. A company using a perpetual system maintains a continuous record of the physical quantities in its inventory

2. Alternative inventory systems Intermediate Accounting 7 Inventories A perpetual inventory system provides for a continuous record of physical quantities in the inventory. A company using a perpetual system maintains a continuous record of the physical quantities in its inventory. A company using the periodic inventory system does not maintain a continuous record of the physical quantities (or costs) of inventory on hand

Intermediate Accounting 7 Inventories Periodic Inventory Systems Cost of Goods Sold is determined and Inventory is adjusted to proper balance at period end All purchases of inventoriable merchandise are recorded in the purchases account Ending inventory is determined by physical count of merchandise on hand

Periodic Inventory Systems Intermediate Accounting 7 Inventories ➢ Cost of Goods Sold is determined and Inventory is adjusted to proper balance at period end. ➢ All purchases of inventoriable merchandise are recorded in the Purchases account. ➢ Ending inventory is determined by physical count of merchandise on hand

Intermediate Accounting 7 Inventories Perpetual Inventory Systems Cost of Goods sold is determined and inventory is adjusted to proper balance each time inventory is purchased or sold All purchases of inventoriable goods are recorded in the Inventory account

Perpetual Inventory Systems Intermediate Accounting 7 Inventories ➢ Cost of Goods Sold is determined and Inventory is adjusted to proper balance each time inventory is purchased or sold. ➢ All purchases of inventoriable goods are recorded in the Inventory account

Intermediate Accounting 7 Inventories Comparison of Systems Perpetual Periodic Inventory system Inventory System Beginning inventory Beginning inventory Purchases(net) Purchases(net) Goods sold Ending Inventory Ending Inventory Goods sold

Comparison of Systems Intermediate Accounting 7 Inventories Perpetual Inventory System Beginning inventory + Purchases (net) - Goods Sold = Ending Inventory Periodic Inventory System Beginning inventory + Purchases (net) - Ending Inventory = Goods Sold

Intermediate Accounting 7 Inventories 3. Items to be included in inventory quantities Economic control at the balance sheet date, and not legal ownership or physical possession, determines what items are to be included in the ending inventory

3. Items to be included in inventory quantities Intermediate Accounting 7 Inventories Economic control at the balance sheet date, and not legal ownership or physical possession, determines what items are to be included in the ending inventory

Intermediate Accounting 7 Inventories Whose Inventory /s It? Goods in inventor Goods in transit Y FOB Shipping Point: buyer's inventory from time of shipment √ FOB Destination: seller’ s inventory until receipt by buyer Goods on Consignment: inventory of the consignor. not the consignee

Whose Inventory Is It? Intermediate Accounting 7 Inventories ➢ Goods in Inventory. ➢ Goods in Transit. ✓FOB Shipping Point: buyer’s inventory from time of shipment. ✓FOB Destination: seller’s inventory until receipt by buyer. ➢ Goods on Consignment: inventory of the consignor, not the consignee

Intermediate Accounting 7 Inventories 4. Determination of inventory costs Inventory Cost is all expenditures related to inventory acquisition preparation and placement for sale v Price paid or consideration given Freight-in R eceIving Y Unpacking √ Inspecting √ Storage v Insurance v Sales and other applicable taxes

4. Determination of inventory costs Intermediate Accounting 7 Inventories ✓ Price paid or consideration given ✓ Freight-in ✓ Receiving ✓ Unpacking ✓ Inspecting ✓ Storage ✓ Insurance ✓ Sales and other applicable taxes Inventory Cost is all expenditures related to inventory acquisition, preparation, and placement for sale