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. Inventories in the Crystal Ball A substantial increase in inventory may be a leading indicator of an upcoming decline
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10, 11, 12 2 5. Flow assumptions. 12, 13, 16, 18, 20 5, 6, 7 9, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22 1, 4, 5, 6, 7 5, 6, 7, 8, 11 6. Inventory accounting changes. 18 7 6, 7, 10 7. Dollar-value LIFO methods. 22, 23, 24, 25, 26 1, 8, 9, 10, 11 8, 9 Copyright © 2013 John Wiley & Sons, Inc. 14, 15, 17, 18, 19 8, 9 Kieso, Intermediate Accounting, 15/e, Solutions Manual 4 (For Instructor Use Only) 8-1 ASSIGNMENT
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the financial statement and tax effects of each of the inventory cost flow assumptions. • Explain the lower of cost or market basis of accounting for inventories. • Compute and interpret the inventory turnover ratio. • Describe the LIFO reserve and explain its importance for comparing results of different companies. Study Objective 1 - Describe the Steps in Determining Inventory Quantities 1. Merchandising Inventory (items held for sale to customers): a. In a merchandising
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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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The assets that a business purchases and holds for resale are called inventory. The three major inventory valuation methods are LIFO, FIFO and Weighted Average. Under the last in, first out inventory (LIFO) method, the cost of the last goods received are charged to cost of goods sold and matched with revenue from sales. When first in, first out inventory (FIFO) method is used, the items in the beginning inventory are assumed to be sold first. Sales are assumed to come in the order in which they
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Margin * Gross Margin percentage of Sales * Income Before Taxes * Income Tax Expense * Pre-tax return on sales, and pre-tax return on assets Using LIFO vs. FIFO affects the ability to directly compare results because of the impact on gross margin and profit. Assuming merchandise costs are rising over time, accounting under LIFO will understate the net income (profit) for the current period by assigning the revenue to the highest cost merchandise. Assuming two companies had
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CHAPTER 6 Inventory Costing ASSIGNMENT CLASSIFICATION TABLE | | |Brief | |Problems |Problems | |Study Objectives |Questions |Exercises |Exercises |Set A |Set B | |1. Describe the steps in determining inventory|1, 2, 3, 4 |1, 2 | 1
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------------------------------------------------- Top of Form Grading Summary | These are the automatically computed results of your exam. Grades for essay questions, and comments from your instructor, are in the "Details" section below. | Date Taken: | 1/29/2012 | Time Spent: | 2 h , 45 min , 16 secs | Points Received: | 129 / 150 (86%) | | Question Type: | # Of Questions: | # Correct: | Essay | 7 | N/A | | | Grade Details | 1. | Question : | (TCO D) A classmate
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Timothy Towfeless Acct 301A Paper Prof. Jose Miranda Lopez FIFO Cost Flow for Buffalo Wild Wings (BWLD) Inventory Throughout the course of this class, many topics have been brought to the table. In every accounting class, they will reiterate the conceptual framework of accounting by briefly discuss about the Income Statement, Balance Sheet and Cash Flow Statement. Each accounting class they will go in depth of those conceptual frameworks, but in the perspective from the side of Assets or Liability
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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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