单击此处编辑母版标题样式,单击此处编辑母版文本样式,第二级,第三级,第四级,第五级,*,*,1,Inventory（存货）,Inventory means a stock of goods that a firm owns and holds for sale(finished goods inventory,成品存货,)or for further processing(raw material inventory,原始材料存货,and work-in-process inventory,在加工存货,).Manufacturing or retailing firms generate profits from selling out their inventories.,2,What is important about accounting for inventory?,A graph,All,Inventory,Inventory,Sold,Inventory,Left in,The,Warehouse,I/S,Revenue.,COGS,.,.,B/S,Assets,Cash,A/R,Inventory,?,3,Inventory costing and earnings Wal-Mart,4,How a firm acquire inventory?,Manufacture:,General Motor purchases steels(,raw material inventory,);workers process steels and manufacture cars(,finished goods inventory,).Before a car is finished,it is in,work-in-process inventory,.,Purchase:,A car dealer purchases new cars from GM,put the cars in its,inventory,before selling them.,5,How a manufacturing firm accumulates costs for its finished goods inventory?,6,Our focus here is on purchased inventory.The accounting for manufactured inventory follows the same rules.,In any given period,the firm starts the period with some inventory(beginning inventory,BI),it then purchases more inventory during the period(new purchases),and sells some inventory(sales).The firm ends the year with some inventory(ending inventory,EI).,The costs(the total amount of money used to purchase)of sold inventory is called cost of goods sold(COGS),7,Inventory equation,In terms of number of units,Beginning inventory+new purchases sales=Ending inventory,In terms of dollar amounts,Beginning inventory+new purchases COGS=Ending inventory,From prior period,Balance sheet,To current,Period,Income statement,To current,Period,Balance sheet,8,Timing of Computation of COGS,Periodic Inventory System,A purchase,Dr.Inventory,Cr.Cash,A sale,Dr.A/R,Cr.Revenue,A sale,Dr.A/R,Cr.Revenue,At end of period:,Dr.COGS,Cr.Inventory,How to decide COGS and EI at end of period:,1)count inventory in the,Warehouse to get EI;2)BI+Purchase(known)EI(counted and costed),=Goods available for sales-EI=COGS,BI,EI,9,Timing of Computation of COGS-2,Perpetual inventory system,BI,EI,A purchase,Dr.Inventory,Cr.Cash,A sale,Dr.A/R,Cr.Revenue,Dr.COGS,Cr.Inventory,A sale,Dr.A/R,Cr.Revenue,Dr.COGS,Cr.Inventory,How to decide COGS and EI:,1)add COGS in all sales journal,Entries to get COGS;2)BI+Purchases(known)COGS=,Goods available for sale COGS=EI,10,Comparisons of the two system,Periodic system,Perpetual system,Make the COGS/Inventory journal entry once a year,Make the COGS/Inventory journal entry every time a sale is made,Have to physically count inventory at end of period to get EI,then compute COGS,Does not have to do physical count of inventory,get COGS directly and then compute EI,All shrinkage(theft,loss,etc.)goes into COGS.Can not tell whether a piece of inventory was actually sold or stolen.,If EI is different from a physical count,the difference is due to theft and waste,then do:,Dr.Loss from inventory shrinkage,Cr.Inventory,Good for large volume,low value goods,such as groceries.,Good for small volume,high value goods,such as cars.,11,Inventory costing methods,(*from now on,we focus on periodic inventory system),The main difficulty in costing inventory is that the,same,products in inventory purchased at,different,time,cost differently,.,BI:10 units$5,1st P:8 units$6,2nd P:15 units$7,3rd P:15 units,$8,Four,Layers,Of,Inventory,At year-end,the firm,Counted inventory and found,16 units in EI,then firm assumed it sold 32 units of,Inventory,how much should EI and COGS be?,Remember:,The products,Are identical,And no price,Tag on them,12,Inventory costing methods-Goods available for sale,From BI:,10 units*$5=$50,From 1,st,purchase,8 units*$6=$48,From 2,nd,purchase,15 units*$7=$105,From 3rd purchase,15 units*$8=$120,Units available for sale:,48 units,Goods available for sales:,$323,13,Inventory costing method:FIFO,first-in,first-out,In the example,first the BI is sold,10 units,Then the 1,st,purchase is sold,8 units,Then 14 units from the 2,nd,purchase are sold,14 units,Then EI includes:1 unit from 2,nd,purchase,1 unit*$7=$7,And 15 units from 3,rd,purchase,15 units*$8=$120,Total EI:16 Units,Total EI in dollar:$7+120=$127,COGS=,Goods available for sale-EI,$323 127=$196,14,Inventory costing method:LIFO,Last-in,first-out,In the example,first the 3,rd,purchase is sold,15 units,Then the 2nd purchase is sold,15 units,Then 2 units from the 1,st,purchase are sold,2 units,Then EI includes:6 unit from 1,st,purchase,6 unit*$6=$36,And 10 units from BI,10 units*$5=$50,Total EI:16 Units,Total EI in dollar:$36+50=$86,COGS=,Goods available for sale-EI,$323 86=$237,15,Inventory costing method:Weighted average,16,Comparisons of EI and COGS under the three methods,Which method you choose if you want to 1)have higher,Net income,or 2)pay less tax?,17,Inventory costing method:the impact on income statement,18,Inventory costing method:discussion in a,rising,cost level environment,FIFO,LIFO,EI contains rec