Inventories Flashcards
What is lay away sale and who is the owner?
Layaway is a way of buying something in which a consumer makes a down payment on an item, which the store then holds for them while they pay the remainder of the price in installments, after which they take possession of it
Seller
Inventories is under PAS?
2
As a rule the entity who owns the goods should pay its related costs
Yes. Like shipping/freight costs
Explain Consigned Goods:
1. Inventoriable Costs
2. Non-inventoriable costs
- Inventoriable Costs:
-Cost of consigned goods
-Freight costs and other handling costs of goods out of consignment - Non-inventoriable costs
-Freight costs if the consigned goods are returned to the consignor
-The original freight costs of returned consigned goods
-storage costs and other reimbursable costs charged to consignor
-Freight costs to final customer
Who is the owner:
Sale on Trial or Approval?
Installment Sale?
Bill and Hold Sale?
Lay away sale?
Special Order Sale?
Sale on Trial or Approval -Seller
Installment Sale-Buyer
Bill and Hold Sale-Buyer
Lay away sale-Seller
Special Order Sale-Buyer upon completion
Bill and hold sale
and who is the owner?
sales arrangement that enables payment ahead of the delivery of the item.
Buyer
INVENTORIES INITIAL MEASUREMENT
Cost of Purchare
+Cost of Conversion
+Other Costs
-Exclusions from Cost:
Trade discounts,rebates, etc.)
Foreign exchange differences
Interest expense (unless inventories are categorized as qualifying assets
Two Methods of Accounting for Inventories
- Periodic - No running balance of COGS
- Perpetual - With running balance of COGS (upon sale and returns)
Two costing formulas for Inventories
And Explain
- FIFO Method - both Perpetual and Periodic same
- Average Method:
Periodic - Weighted Ave. Method:
WAM Unit cost= TGAS (pesos) / TGAS (units)
Perpetual - Moving Average Method :
Average Unit Cost must be computed after every purchase and purchase return
Inventories
How to compute NRV??
a. FGs / Mech. Inventories = Estimated Selling Price - Estimated Cots to Sell
b. WIP = ESP - ECTS - ECTC
Two methods for Inventory Writedown
Direct Method/COGS
Allowance Method/LOSS METHOD
TWO METHODS FOR INVENTORY ESTIMATION
EXPLAIN THE DIFF.
Gross Profit Method - Basic
Retail Inventory Method - mostly for retail businesses
The only diff is in RIM:
a. the cost ratio is computed directly WITHOUT regard to the GPR
b. Net mark-ups and net mark-downs are considered
Also, the ending inventory under GPM is stated at cost while in RIM stated at SELLING PRICE
Three methods for Retail Inventory
And Explain the Treatment of BI, Mark-up, and Markdown to all of them
- FIFO Cost Method BI(no) MarkUp(yes) Markdown(yes)
- Average Cost Method BI(yes) MarkUp(yes) Markdown(yes)
- Conservative / Conventional / LCNRV BI(yes) MarkUp(yes) Markdown(no)
IMPT: The unit cost of Sales Return under FIFO costing method should costed back be based on?
LATES PURCHASE COST!
Gross Margin is also Gross Profit
True
