added when a process has both beginning and ending work-in-process inventory; this case necessitates selecting an inventory costflow method. The chapter illustrates two of these methods: the weighted-average method and the first-in, first-out (FIFO) method. Many detailed exhibits are included in the chapter because process costing is highly procedural. The chapter also explains how operation-costing systems determine the cost of products. The Appendix to the chapter describes the standard-costing
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8394d_c08.qxd 6/11/02 12:30 PM Page 345 mac62 mac62:1253_GE: Accounting for Inventories Inventories in the Crystal Ball Policy makers, economists, and investors all want to know where the economy is headed. For example, if the economy is headed for a slow-down, it might be prudent on the part of the Federal Reserve to cut interest rates or for Congress to consider a tax cut to head off an economic downturn. Information on inventories is a key input into various decision makers’
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Circle the one best answer. 1. A private organization which establishes broad accounting principles as well as specific accounting rules is the a. Securities and Exchange Commission. b. Internal Revenue Service. c. Financial Accounting Standards Board. X d. Corporate Board of Directors. 2. An increase in an expense a. increases revenues. b. increases assets. c. decreases liabilities. d. decreases stockholders’ equity. X 3
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finished goods, and/or merchandise inventory. The balance in this account is also affected by accounting decisions. Accounting standards permit various acceptable inventory measurement methods, including last-in-first-out (LIFO), first-in-first-out (FIFO), weighted average, and specific identification. Specific identification has been used most frequently for inventories in which the separate items are distinct and have a high cost, such as fine jewelry, because the benefit to be gained from tracking
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Systems Design: Process Costing Similarities Between Job-Order and Process Costing • Both systems assign material, labor and overhead costs to products and they provide a mechanism for computing unit product cost. • Both systems use the same manufacturing accounts, including Manufacturing Overhead, Raw Materials, Work in Process, and Finished Goods. • The flow of costs through the manufacturing accounts is basically the same in both systems. Differences Between Job-Order and Process Costing
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Chapter 5—Inventory Merchandiser Makes a profit by buying and selling merchandise. A wholesaler is an intermediary that buys goods from manufacturers or other wholesalers and sells them to retailers or other wholesalers. A retailer buys goods from manufacturers or wholesalers and sells directly to consumers Operating cycle for Merchandisers Begins with the purchase of inventory and ends when cash is received from selling the inventory. Manufacturer Makes a profit by buying raw materials
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Topic: Inventory Valuation (continue) These are assumptions of sequencing, but should know the cost of associated with whatever went out. Four (4) key methods of inventory valuation Method # 1: First In First Out (FIFO) First items to come into inventory are the first to leave Last items to come into inventory remain in inventory Method 2 Last in First Out (L-I-F-O) Last (most recent) items to come into inventory are first to leave inventory 1st items to come in remain in
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disclosure rules used to develop the information in financial statements (Libby, Libby, Short. pg. 16). When reporting inventory, there are generally four inventory reporting methods used; Specific identification method, first-in, first-out method (FIFO), last-in, first out method (LIFO), and average cost method. Each method is in conformity with GAAP and the law. Also each method has their own implications during periods of inflation and deflation. They can also affect the net income results reported
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com/financial/principles/consistency 2. Computer Company Z has been using First-in-First-out method (FIFO) for valued its own inventory. According to the consistency principle, once accountants adopt First-in-First-out method (FIFO) for valued its own inventory, it must continue to use in future accounting period. If the company wants to change the inventory valuation method from First-in-First-out method (FIFO) to Weighted Averaged method (WAC), it must provide a justifiable reason and the effect of the
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GAAP 强制性规定 选择性规定 Balance Sheet Marketable Investment Securities Classified as held-to-maturity, trading and available-for-sale. LIFO, FIFO and the average cost method. Inventory Once an inventory write-down occurs, any subsequent recovery of value is ignored. Subsequent recovery of value can be included. Trading securities are known as held-for-trading securities. FIFO and the average cost method. IFRS 强制性规定 选择性规定 Case 1 Property and Equipment Don’t permit upward revaluations. Permit upward
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