Resources Management
How does a company gather information about its inventory?
USD 10.00
Learning Objectives:
- Understand that inventory is recorded initially at its historical cost.
- Provide the guiding rule for identifying expenditures and other costs that must be capitalized in the reporting of inventory.
- Explain the rationale for offering a cash discount for payments made within a specified period of time as well as the accounting for such cost reductions.
- Identify the attributes as well as both the advantages and disadvantages of a perpetual inventory system.
- Identify the attributes as well as both the advantages and disadvantages of a periodic inventory system.
- Provide journal entries for a variety of transactions involved in the purchase of inventory using both a perpetual and a periodic inventory system.
- Explain the meaning of the FOB point in connection with an inventory purchase and its impact on the recording of the transaction.
- Identify the time at which cost of goods sold is computed in a perpetual inventory system as well as the recording made at the time of sale.
- Identify the time at which cost of goods sold is computed in a periodic inventory system as well as the recording made at the time of sale.
- Provide the computation used in a periodic inventory system to derive cost of goods sold along with the adjusting entry necessary to enter the appropriate balances into the accounting system for each period.
- Understand the necessity of taking a physical inventory count.
- Explain the need for reporting inventory at the lower-of-cost-or-market.
- Differentiate between a problem caused by a drop in the purchase value of inventory and one coming from the sales value of the merchandise.
- Understand the difference in applying the lower-of-cost-or-market rule under U.S. GAAP and IFRS.
- Understand the necessity of taking a physical inventory even in a perpetual inventory system.
- Estimate the amount of inventory on hand using historic gross profit percentages and identify the situations when this computation might be necessary.
Other course details:
- This is an introductory course that does not require any prerequisite.
- This course can be taken on a standalone basis.
- This course is chapter 8 in the book titled "Financial Accounting".
- It provides 3 PDUs towards your PMP professional development education.
Course Features
Credits:
2 PDU
Skill Section:
Technical
Access:
Lifetime
Test Questions:
15