會計英語簡明版-Lesson-6-Inventory-and-Cost-of-Goods-Sales課件

YESUNAccountingEnglish@20091Lesson6InventoryandCostofGoodsSalesYESUNAccountingEnglish@20091YESUNAccountingEnglish@20092InventoryIssuesWhatisinventory?Whatcostsareincludedininventory?HowdoweseparateCOGSfromEnd.Inv?YESUNAccountingEnglish@20092YESUNAccountingEnglish@20093InventoriesDefinitionAssetitemsheldforsaleintheordinarycourseofbusinessorgoodsthatwillbeusedorconsumedintheproductionofgoodstobesold.YESUNAccountingEnglish@20093YESUNAccountingEnglish@20094TypesofCompaniesMerchandisingcompanySellsgoodsinsameformasacquired.ManufacturingcompanyConvertsrawmaterialintofinishedgoods.ServicecompanyProvidesintangibleservices.YESUNAccountingEnglish@20094YESUNAccountingEnglish@20095TypesofCompanies/InventoriesMerchandisingSellsgoodsinsameforminwhichtheyareacquired.Inventorycosts(andcostsofgoodssold)=acquisitioncosts.YESUNAccountingEnglish@20095YESUNAccountingEnglish@20096TypesofCompanies/Inventories

(Cont.)Manufacturingcompanyconvertsrawmaterialsandpurchasedpartsintofinishedgoods.3typesofinventories;Materials.Work-in-process.Finishedgoods.YESUNAccountingEnglish@20096YESUNAccountingEnglish@20097TypesofCompanies/Inventories

(Cont.)Serviceorganizations(hotels,beautyparlors,plumbers)Mayhavematerialsinventories.YESUNAccountingEnglish@20097YESUNAccountingEnglish@20098TypesofCompanies/Inventories

(Cont.)Professionalservicefirms(accountingfirms,legalfirms)Intangibleinventorycostsarecostsincurredforclientbutnotyetbilledcalledjobs-in-progressorunbilledcosts.YESUNAccountingEnglish@20098YESUNAccountingEnglish@20099SuppliesTangibleitemsthatwillbeconsumedinthecourseofnormaloperations.e.g.,officesupplies,lubricants,repairparts.Notsoldandnotaccountedforaspartofcostofgoodssold.YESUNAccountingEnglish@20099YESUNAccountingEnglish@200910MerchandiseInventoryInventoriesaccountedforatcost.CostincludescostofAcquiringmerchandise(invoicecostofgoods,freight-in)Makinggoodsreadyforsale.(unpackingandmarking)YESUNAccountingEnglish@20091YESUNAccountingEnglish@200911MethodsofAccountingforPurchase(orcash)DiscountsRecordatinvoiceprice(inchina)Recorddiscountwhentaken.NetofdiscountChargediscountsnottakenwhenpaid.YESUNAccountingEnglish@20091YESUNAccountingEnglish@200912TerminologyPurchase=receiptofmerchandisenottoplacingofapurchaseorder.Usuallytitletransferswhengoodsareshipped(FOBshippingpoint).YESUNAccountingEnglish@20091YESUNAccountingEnglish@200913RelationshipofInventoryandCostofGoodsSoldBeginninginventory+netpurchases=goodsavailableforsaleGoodsavailableforsale=costofgoodssold+endinginventory.Equivalently:Beg.inventory+netpurchases-endinginventory=costofgoodssold.Netpurchases=grosspurchases-purchasereturnsandallowances+freight-inYESUNAccountingEnglish@20091YESUNAccountingEnglish@200914MeasurementIssueDividinggoodsavailableforsalebetweenCOGSandEnd.Inventory.2approaches:Periodicinventorymethod.Perpetualinventorymethod.YESUNAccountingEnglish@20091YESUNAccountingEnglish@200915PeriodicInventoryMethodDetermineamountofendinginventoryanddeducecostsofgoodssold.Countinventory(i.e.,aphysicalinventoryistaken)attheendoftheperiod.Multiplycounttimescostforeachitemtodeterminetotalamountofinventory.Beginninginventoryofcurrentperiod=endinginventoryofprecedingperiod.COGS=COGA-End.InventoryYESUNAccountingEnglish@20091YESUNAccountingEnglish@200916PerpetualInventoryMethodMeasureamountactuallydeliveredtocustomers;deduceendinginventory.Perpetualinventoryrecordiskeptforeachitemintheinventory.Advantagesofperpetualinventorymethod:Detailedrecordisuseful.Builtincheck.Identifiesshrinkagebyitem.Incomestatementcanbepreparedwithouttakingaphysicalinventory.YESUNAccountingEnglish@20091YESUNAccountingEnglish@200917InventoryCostingMethods

(CostFlowAssumptions)Specificidentification.Averagecost.FIFOLIFO(×)YESUNAccountingEnglish@20091YESUNAccountingEnglish@200918SpecificIdentificationBigticket(highprice)items.Uniquelyidentifieditems.Mayofferopportunitytomanipulatecosts.YESUNAccountingEnglish@20091YESUNAccountingEnglish@200919AverageCost(Beginninginventoryamount+purchases)/unitsavailableforsale=perunitinventorycosts=perunitcostofgoodssoldPeriodicmethod.Computedfortheentireperiod.Perpetualmethod.Anewunitcostcanbecalculatedaftereachpurchase.YESUNAccountingEnglish@20091YESUNAccountingEnglish@200920First-in,First-out(FIFO)Expensescostsofoldestpurchasesfirst.Mostrecentlypurchasedgoodsareininventory.Likelybutnotnecessarytofollowactualflowofgoods.Endinginventoryapproximatescurrentcostofgoods.YESUNAccountingEnglish@20092YESUNAccountingEnglish@200921Last-in,First-out(LIFO)AssumesmostrecentlypurchasedgoodsaresoldfirstInventorybasedoncostsofoldestpurchases.Costofgoodssoldusuallydoesnotreflectphysicalflow.Endinginventorymaybecostedatamountsofyearsago.Inventorymaybewellbelowcurrentcosts.YESUNAccountingEnglish@20092YESUNAccountingEnglish@200922YESUNAccountingEnglish@20092YESUNAccountingEnglish@200923ArgumentsforFIFOUsuallyfollowsphysicalflowofgoods.Ifpricesarebasedonoldestcost,resultsinbestmatching.Moreaccuratebalancesheetvaluation.Non-theoretical/practicalargument:Resultsinhighestincomeduringperiodsofrisingprices.YESUNAccountingEnglish@20092YESUNAccountingEnglish@200924ArgumentsforLIFOIfpricesarebasedoncurrentcosts,resultsinbestmatchingofrevenuesandcostsandthereforemostusefulincomestatement.Closesttoreflectingcurrentorreplacementcostsofgoodssold.However,itisstillhistoricalcostsanddoesdifferfromcurrentcosts.YESUNAccountingEnglish@20092YESUNAccountingEnglish@200925ArgumentsforLIFO

(cont.)Duringperiodsofpriceincreases:Highercostsofgoodssold.Lowertaxableincome.Lowerincometaxes.Highercashflows.IfLIFOfortaxpurposesthanalsofinancialreporting.YESUNAccountingEnglish@20092YESUNAccountingEnglish@200926WhyNotMoreLIFO?IASandmostcountriesdonotpermit.Wouldrequireadoublesetofbooks.Pricesofsomeitemsarenotincreasing.BecauseofIRSconformityrequirement,lowerearningsreportedtoshareholders.YESUNAccountingEnglish@20092YESUNAccountingEnglish@200927ThePrincipleofConsistencyOnceacompanyhasadoptedaparticularaccountingmethod,itshouldfollowthatmethodconsistently,ratherthanswitchmethodsfromoneyeartothenext.YESUNAccountingEnglish@20092YESUNAccountingEnglish@200928LCMandOtherWrite-DownsofInventoryReducesthevalueoftheinventory.ObsolescenceAdjustinventoryvaluetothelowerofhistoricalcostorNetrealizablevalue(market).LowerofCostorMarket(LCM)YESUNAccountingEnglish@20092YESUNAccountingEnglish@200929LowerofCostorMarket(LCM)Marketpricemaybebelowcostdueto:Physicaldeterioration.Changeinconsumertastes.Technologicalobsolescence.LCMisareflectionofconservatismconcept.MarketisdefinedasnetrealizablevalueYESUNAccountingEnglish@20092YESUNAccountingEnglish@200930Netrealizablevalue(NRV)NRV=estimatedsellingprice-estimatedcostsofselling.Soinventorynotabovecashthatwillbereceived.YESUNAccountingEnglish@20093YESUNAccountingEnglish@200931StepsinApplyingLCMComputemarket,Selectlowerofcostormarket.YESUNAccountingEnglish@20093YESUNAccountingEnglish@200932InventoryestimationmethodYESUNAccountingEnglish@20093YESUNAccountingEnglish@200933TheGrossProfitMethodDeterminecostofgoodsavailableforsale.Estimatecostofgoodssoldbymultiplyingthenetsalesbythecostratio.Deductcostofgoodssoldfromcostofgoodsavailableforsaletodetermineendinginventory.YESUNAccountingEnglish@20093YESUNAccountingEnglish@200934TheGrossProfitMethod

ExampleInMarchof1999,Chemico’sinventorywasdestroyedbyfire.Chemico’snormalgrossprofitratiois30%ofnetsales.Atthetimeofthefire,Chemicoshowedthefollowingbalances:YESUNAccountingEnglish@20093YESUNAccountingEnglish@200935TheGrossProfitMethod

Example

EstimateCostofGoodsSold.

YESUNAccountingEnglish@20093YESUNAccountingEnglish@200936TheGrossProfitMethod

Exampl