Chapter 8
Inventory
Types of Inventory
Inventory for a manufacturer consists of:
Slide 5
Slide 6
Perpetual Inventory System
Illustration: Perpetual Inventory System
Illustration: Perpetual Inventory System (continued)
Periodic Inventory System
Illustration: Periodic Inventory System
Illustration: Periodic Inventory System (continued)
Illustration: Cost of Goods Sold
Illustration: Cost of Goods Sold (continued)
A Comparison of the Perpetual and Periodic Inventory Systems
Physical Quantities Included in Inventory
Goods in Transit
Goods in Transit
Goods in Transit (continued)
Goods on Consignment
Sales Returns
Expenditures Included in Inventory
Expenditures Included in Inventory (continued)
Expenditures Included in Inventory (continued)
Expenditures Included in Inventory (continued)
Expenditures Included in Inventory (continued)
Illustration: Purchase Discounts
Illustration: Purchase Discounts (continued)
Illustration: Purchase Discounts (continued)
Slide 30
Slide 31
Slide 32
Inventory Cost Flow Assumptions
Illustration: Cost Flow
Illustration: Allocation of Units Available
Illustration: Allocation of Cost of Goods Available
Specific Identification
Cost Flow Assumptions
Cost Flow Methods (continued)
Average Cost Method
Illustration: Average Cost—Periodic Inventory System
Average Cost Method
Illustration: Average Cost—Perpetual Inventory System
First-In, First-Out (FIFO)
Illustration: FIFO—Periodic Inventory System
Illustration: FIFO—Periodic Inventory System
Illustration: FIFO—Perpetual Inventory System
Last-In, First-Out (LIFO)
Illustration: LIFO—Periodic Inventory System
Illustration: LIFO—Periodic Inventory System (continued)
Illustration: LIFO—Perpetual Inventory System
Comparison of Cost Flow Methods
Disclosure note for Inventory
Illustration: Inventory Cost Flow Methods Used in Practice
Slide 55
Factors Influencing Method Choice
Factors Influencing Method Choice (continued)
Income Taxes and Net Income
International Financial Reporting Standards
Illustration: Inventories Disclosure—Rite Aid Corporation
Inventories Disclosure
LIFO Reserves
Inventories Disclosure
Illustration: Inventories Disclosure—Books-A-Million
LIFO Liquidations
Illustration: LIFO Liquidation
Illustration: LIFO Liquidation (continued)
Inventory Management
Just-in-time (JIT) system
Key Ratios Used to Monitor Investment in Inventories
Slide 71
Methods of Simplifying LIFO
LIFO Inventory Pools
LIFO Inventory Pools (continued)
LIFO Inventory Pools (continued)
Dollar-Value LIFO
Dollar-Value LIFO (continued)
The DVL Inventory Estimation Technique
The DVL Inventory Estimation Technique
Slide 80
The DVL Inventory Estimation Technique (continued)
End of Chapter 8