International accounting standards 6 Flashcards
1
Q
accounts payable (znaczenie)
A
rachunki do zapłacenia
2
Q
Goods included in inventory (znaczenie)
A
towar ujęty w inwentarzu
3
Q
goods included in inventoryL
A
- A company recognizes inventory and accounts payable at the time it controls the asset.
- Passage of title is often used to determine control because the rights and obligations are established legally
4
Q
passage of title (znaczenie)
A
przeniesienie tytułu (prawa?)
5
Q
Special issues (examples)
A
- Goods in transit
- Consigned goods
- Sales with repurchase agreements
- Sales with rights of return
6
Q
consigned goods (znaczenie)
A
przekazane towary (z pokwitowaniem)
7
Q
sales with repurchase agreements (znaczenie)
A
sprzedaż z przyrzeczeniem odkupu
8
Q
Goods in transit:
A
- Purchased goods not yet received
- Sold goods not yet delivered
- Goods in transit should be included in the inventory of the company that has legal title to the goods.
- Legal title is determined by the
terms of sale (e.g. FOB destination)
9
Q
Consigned goods:
A
- To hold the goods of other parties and try to sell the goods for them for a fee, but without taking ownership of the goods.
- Many car, boat, and antique dealers sell goods on consignment
- Until sold, goods are included in the inventory of the seller (consignor), not the middle-man (consignee)
10
Q
period costs (znaczenie)
A
koszty pośrednie produkcji
11
Q
Product costs (znaczenie)
A
Costs directly connected with bringing the goods to the buyer’s place of business and converting such goods to a salable condition.
Cost of purchase includes all of:
* The purchase price.
* Import duties and other taxes.
* Transportation costs.
* Handling costs directly related
to the acquisition of the goods
12
Q
Period costs:
A
Costs that are indirectly related to the acquisition or production of goods.
13
Q
Costs not included in inventory:
A
- abnormal waste
- storage costs (do not increased the cost of inventory)
- administrative overheads unrelated to production
- selling costs
- foreign exchange differences arising directly on the recent acquisition of inventories invoiced in a foreign currency
- interest cost when inventories are purchased with deferred settlement terms.
14
Q
Inventory costs (znaczenie)
A
koszty magazynowania
15
Q
storage costs (znaczenie)
A
koszty magazynowania
16
Q
Cost Flow Methods
A
metody przepływu kosztów
17
Q
Items that are not interchangeable
A
- specific costs are attributed to the specific individual items of inventory
18
Q
interchangeable (znaczenie)
A
zamienne
19
Q
Items that are interchangeable
A
- FIFO
- weighted average cost
- LIFO (forbidden in international accounting standards
20
Q
First-in, First-out
A
- Costs of earliest goods purchased are first to be
recognized in determining cost of goods sold - Often parallels actual physical flow of merchandise
- Companies determine cost of ending inventory by taking unit cost of most recent purchase and working backward until all units of inventory have been costed
21
Q
Avarage- cost
A
- Allocates cost of goods available for sale on basis of weighted- average unit cost incurred
- Applies weighted-average unit cost to units on hand to determine cost of ending inventory
22
Q
last-in, first-out
A
- Costs of latest goods purchased are first to be recognized in determining cost of goods sold
- Seldom coincides with actual physical flow of merchandise (Rzadko pokrywa się z rzeczywistym fizycznym przepływem towarów)
- Exceptions include goods stored in piles, such as coal or hay (siano)
23
Q
Balance sheet effects:
A
- A major advantage of the FIFO method is that in a period of inflation, costs allocated to ending inventory will approximate their current cost
- A shortcoming of the average-cost method is that in a period of inflation, costs allocated to ending inventory may be understated in terms of current cost
24
Q
Tax effects
A
- Both inventory and net income are higher when
companies use FIFO in a period of inflation - LiFo results in lower income taxes (because of lower net income) during times of rising prices
- Average-cost method results – in fact – the average
numbers, between FiFo and LiFo
25
Inventory Errors: common cause and effect
- Failure to count or price inventory correctly
- Not properly recognizing the transfer of legal title to goods in transit
- Errors affect both the income statement
and the statement of financial position
26
Cost of goods sold=
beginning inventory + cost of goods purchased - ending inventory = cost of goods sold
27
Income Statement Effects:
- Inventory errors affect the computation of cost of goods sold and net income in two periods
- An error in ending inventory of current period will have a reverse effect on net income of next accounting period
- Over two years, total net income is correct because errors offset each other
- Ending inventory depends entirely on accuracy of taking and costing inventory
28
computation of cost of goods cost (znaczenie)
kalkulacja kosztu własnego sprzedaży
29
Statement Presentation:
- Statement of Financial Position - Inventory classified as current asset
- Income Statement - Cost of goods sold subtracted from (odjęty od) sales
- There also should be disclosure of (ujawnienie) major inventory classifications basis of accounting (cost or LCNRV) costing method (FIFO, or average-cost)
30
write-off (znaczenie)
odpisanie wartości zapasów
31
When the value of inventory is lower than its cost
- Companies must “write down”
inventory to its net realizable value
- Net realizable value: Amount that company expects to realize (receive from the sale of inventory)
- Example of conservatism
32
Inventory management is a double-edged sword:
- High Inventory Levels - may incur high carrying costs (e.g., investment, storage, insurance, obsolescence, and damage).
- Low Inventory Levels – may lead to stock-outs and lost sales
33
stock- outs (znaczenie)
wyczerpanie
34
Inventory turnover
Inventory turnover measures the number of times on average the inventory is sold during the period.
Inventory Turnover = Costs of goods sold/ average inventory
35
Days in inventory
Days in inventory measures the average number of days inventory is held
Days in inventory = Days in year (365)/ inventory turnover
