Measuring and Reporting Inventories
Completion requirements
Read this chapter. For many organizations, inventory represents a large portion of their assets, so it is important to be familiar with measurement and reporting techniques. Inventory is a major cost for many businesses, and a big source of potential opportunity for firms looking to improve their financial results.
Learning objectives
After studying this chapter, you should be able to:
- Explain and calculate the effects of inventory errors on certain financial statement items.
- Indicate which costs are properly included in inventory.
- Calculate cost of ending inventory and cost of goods sold under the four major inventory costing methods using periodic and perpetual inventory procedures.
- Explain the advantages and disadvantages of the four major inventory costing methods.
- Record merchandise transactions under perpetual inventory procedure.
- Apply net realizable value and the lower-of-cost-or-market method of inventory.
- Estimate cost of ending inventory using the gross margin and retail inventory methods.
- Analyze and use the financial results- inventory turnover ratio.
Source: Textbook Equity, https://learn.saylor.org/pluginfile.php/41219/mod_resource/content/3/AccountingPrinciples.pdf
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