Studied by 1 person
Looks like no one added any tags here yet for you.
Periodic Inventory System
Updates inventory at specific intervals.
Ending Inventory
Weighted average cost per unit times quantity.
Accelerated Depreciation
Higher expense in earlier years.
Machine Costs
Costs to make an asset operational.
Capital Expenditures
Costs that extend an asset's useful life.
COGS Calculation
Determine based on earliest purchases for FIFO.
Errors in Inventory
Impact current and subsequent financial periods.
Gross Profit Percentage =
Gross Profit/Net Sales Revenue
Gross Profit
Net Sales Revenue minus Cost of Goods Sold.
Gross Profit Percentage
Gross Profit divided by Net Sales Revenue.
LIFO
Last In, First Out inventory method.
Specific Identification
Method for unique items like cars.
Inventory Turnover
COGS divided by Average Inventory.
Straight-Line Depreciation
Equal expense amount each year.
Land Costs
Includes purchase price and preparation costs.
Delivery Truck Costs
Costs to operationalize the truck, excluding repairs.
Patents
Exclusive rights granted for 20 years.
Lower-of-Cost-or-Market Rule
Adjust inventory to lower of cost or market value.
Total Asset Turnover
Sales divided by Average Total Assets.
Income Statement Order
Sales Revenue, COGS, Gross Profit, Operating Expenses.
Gross profit=
sales revenue - cost of goods sold
Perpetual Inventory System
a computerized accounting method that tracks inventory levels in real time:
Periodic Inventory System
a method of inventory valuation that involves physically counting inventory at specific intervals to update stock levels.
FIFO (First-In, First-Out):
The first items purchased (oldest costs) are the first ones to be sold.Tends to show higher profits and inventory values during times of rising prices, as older, lower-cost items are recorded as the cost of goods sold (COGS), and newer, higher-cost items remain in inventory.
FIFO ends in...
Higher ending inventory and lower COGS
LIFO (Last-In, First-Out)
The most recent items purchased (newest costs) are the first ones to be sold.Can provide tax benefits in times of rising prices since it increases COGS and reduces taxable income.
LIFO ends in ....
low ending inventory and Higher COGS
Perpetual Inventory System
Continuous tracking of inventory and COGS.
FIFO
First In, First Out inventory method.
Average Cost
Total cost of inventory divided by units.
