In this chapter, the following content will be discussed: Describe the steps in determining inventory quantities, explain the accounting for inventories and apply the inventory cost flow methods, explain the financial effects of the inventory cost flow assumptions. | Valuation of Inventories Issues PART II: Corporate Accounting Concepts and Issues Lecture 10 Identify major classifications of inventory. Distinguish between perpetual and periodic inventory systems. Identify the effects of inventory errors on the financial statements. Understand the items to include as inventory cost. Describe and compare the cost flow assumptions used to account for inventories. Explain the significance and use of a LIFO reserve. Understand the effect of LIFO liquidations. Explain the dollar-value LIFO method. Identify the major advantages and disadvantages of LIFO. Understand why companies select given inventory methods. Learning Objectives Inventory Issues Physical Goods Included in Inventory Costs Included in Inventory Cost Flow Assumptions LIFO: Special Issues Classification Cost flow Control Basic inventory valuation Basis for Selection Goods in transit Consigned goods Special sales agreements Inventory errors Product costs Period costs Purchase discounts . | Valuation of Inventories Issues PART II: Corporate Accounting Concepts and Issues Lecture 10 Identify major classifications of inventory. Distinguish between perpetual and periodic inventory systems. Identify the effects of inventory errors on the financial statements. Understand the items to include as inventory cost. Describe and compare the cost flow assumptions used to account for inventories. Explain the significance and use of a LIFO reserve. Understand the effect of LIFO liquidations. Explain the dollar-value LIFO method. Identify the major advantages and disadvantages of LIFO. Understand why companies select given inventory methods. Learning Objectives Inventory Issues Physical Goods Included in Inventory Costs Included in Inventory Cost Flow Assumptions LIFO: Special Issues Classification Cost flow Control Basic inventory valuation Basis for Selection Goods in transit Consigned goods Special sales agreements Inventory errors Product costs Period costs Purchase discounts Specific identification Average cost FIFO LIFO LIFO reserve LIFO liquidation Dollar-value LIFO Comparison of LIFO approaches Advantages of LIFO Disadvantages of LIFO Summary of inventory valuation methods Valuation of Inventories: Cost-Basis Approach Inventories are: items held for sale, or goods to be used in the production of goods to be sold. Inventory Issues LO 1 Identify major classifications of inventory. Merchandiser Manufacturer Businesses with Inventory or Classification One inventory account. Purchase goods in form ready for sale. Inventory Issues LO 1 Identify major classifications of inventory. Illustration 8-1 Classification Three accounts Raw materials Work in process Finished goods Inventory Issues Classification Illustration 8-1 LO 1 Identify major classifications of inventory. Classification Inventory Issues Illustration 8-2 LO 1 Identify major classifications of inventory. Inventory Cost Flow Inventory Issues Illustration 8-3 Companies use one of two types of systems for .
