ACC 201 Cheat Sheet by kmell
Inventory Management Decisions
Primary goals of management decisions:
1. Maintain sufficient quantity to meet customer needs
2. Ensure quality meets customers expectations
3. Minimize costs of getting/carrying inventory
Reporting Inventory
Income Statement: once items are sold,
you remove cost of goods sold from
income statement
Balance Sheet: inventory is
set up as an asset when
purchased
Percentage of Credit Sales v Aging of A/R
% (income statement method) easier to compute; aging (balance sheet
method) is more accurate
income statement method: begin by writing journal entries in problem
balance sheet method: begin by making a chart
STEPS TO FIFO/LIFO/WEIGHTED AVERAGE
FIFO
LIFO
WEIGHTED AVERAGE
STEP 1: begin by
doing COGA.
STEP 2: when
determining
COGS, remember
to do FIRST-IN--
FIRST-OUT
STEP 1: SAME AS
FIFO STEP 2.
REMEMBER TO
DO LAST-IN-F-
IRST-OUT
STEP 1: SAME AS FIFO AND
LIFO STEP 2: DIVIDE COGA
BY NUMBER OF UNITS
AVAILABLE STEP 3. USE
THE NUMBER TO FIND
COGS AND COST OF
ENDING INVENTORY
Sales Transactions
FOB Shipping Point
FOB Destination
FOB Shipping: sale recorded when goods leave seller's shipping department
FOB Destination: sale recorded when goods reach destination
FORMULAS
COGS = COGA - EI
COGA = BI + PURCHASES
GROSS PROFIT = SALES
- COGS
INTEREST = PRINCIPAL X INTEREST
RATE X TIME
NET RELIZABLE VALUE: A/R TOTAL - ALLOWANCE TOTAL
Types of Inventory
Merchandisers
Manufacturers
Merchandisers: buy + sell finished goods
Manufacturers: buy raw materials + produce and sell finished goods
(raw materials, work in process, and finished goods)
