tailieunhanh - Lecture Accounting principles (8E): Chapter 6 - Coby Harmon

After completing this chapter you should be able to: 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,.and other contents. | CHAPTER 6 INVENTORIES Accounting Principles, Eighth Edition 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. Explain the lower-of-cost-or-market basis of accounting for inventories. Indicate the effects of inventory errors on the financial statements. Compute and interpret the inventory turnover ratio. Study Objectives 1. On the topic, “Challenges Facing Financial Accounting,” what did the AICPA Special Committee on Financial Reporting suggest should be included in future financial statements? Non-financial Measurements (customer satisfaction indexes, backlog information, and reject rates on goods purchases). Forward-looking Information Soft Assets (a company’s know-how, market dominance, marketing setup, well-trained employees, and brand image). Timeliness (no real time financial information) Reporting and Analyzing Inventory Taking a physical inventory Determining ownership of goods Classifying Inventory Determining Inventory Quantities Inventory Costing Inventory Errors Statement Presentation and Analysis Finished goods Work in process Raw materials Specific identification Cost flow assumptions Financial statement and tax effects Consistent use Lower-of-cost-or-market Income statement effects Balance sheet effects Presentation Analysis Service Cost - Actuaries compute service cost as the present value of the new benefits earned by employees during the year. Future salary levels considered in calculation. Interest on Liability - Interest accrues each year on the PBO just as it does on any discounted debt. Actual Return on Plan Assets - Increase in pension funds from interest, dividends, and realized and unrealized changes in the fair market value of the plan assets. Amortization of Unrecognized Prior Service Cost - The cost of providing retroactive benefits is allocated to pension expense in the future, . | CHAPTER 6 INVENTORIES Accounting Principles, Eighth Edition 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. Explain the lower-of-cost-or-market basis of accounting for inventories. Indicate the effects of inventory errors on the financial statements. Compute and interpret the inventory turnover ratio. Study Objectives 1. On the topic, “Challenges Facing Financial Accounting,” what did the AICPA Special Committee on Financial Reporting suggest should be included in future financial statements? Non-financial Measurements (customer satisfaction indexes, backlog information, and reject rates on goods purchases). Forward-looking Information Soft Assets (a company’s know-how, market dominance, marketing setup, well-trained employees, and brand image). Timeliness (no real time financial information) Reporting and Analyzing Inventory .