process of becoming finished products and the finished products themselves. Inventory usually comprises a significant portion of total assets. There are three main methods for calculating inventory: Last-in‚ First-out (LIFO); First-in‚ First-out (FIFO); and Average Cost Method (AVCO). Because the cost of raw materials can change over time‚ even during the same accounting
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Contents Page Introduction………….……………………………… 1 Discussion Part (A)….……………………….………2/ Discussion Part (B)…...………………….……….......... Conclusion....................................................................... Bibliography.................................................................... Appendices....................................................................... Introduction According to the Chartered Institute of Management Accountants (CIMA)
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balance sheet‚ but also the value of the goods sold are shown as an expense on the income statement. Therefore‚ it is extremely important that the valuation method chosen for inventory is appropriate‚ of which there are three main methods: LIFO‚ FIFO‚ and AVCO. If inventory is not
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WINDOW DRESSING Window dressing is presenting company accounts in a manner which enhances the financial position of the company. It is a form of creative accounting involving the manipulation of figures to flatter the financial position of the business. It is also defined as: ‘A form of accounting‚ which while complying with all the regulations‚ nevertheless‚ gives a biased impression of the company’s performance.’ Though it is not illegal‚ it is considered by many financial pundits asunethical
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1FU251 Exercise I Nostress‚ Ltd. Is engaged in the assembly of printing machines and is starting its operations in December 2012. The following transactions took place during December 2012: Material consumed during production 500 000. The wages for December were - wages of production workers were - Wages of administration people were - wages of distribution workers were 100 000‚ out of which: 60 000 30 000 10 000 Depreciation of production machines and buildings were Depreciation of administrative
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Income statement The income statement or the profit and loss account as it is also called measures reports how much profit (wealth) has the business generated over a period of time. To measure profit the total generated revenue over a period must be identified. Revenue is a measure of inflow of economic benefits arising from the operations of the business. These benefits will either result in an increase of assets such as cash or amounts owed to the business by the customers or a decrease
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Sold January 20 @ $20 each April 15 @ $45 each March 25 @ $30 each November 20 @ $55each September 30 @ $40 each Calculate the closing stock value using the following methods: a) First in first out (FIFO) b) Last in first out (LIFO) c) Average cost method (AVCO) d) Calculate the gross profits under the 3 methods separately Question 3: Jackson Company maintains its non-current assets at cost. The following information has been extracted from the book of Jackson as at 31
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Inventory Valuation 1 Lewis Corporation Case: 6-2 Page: 173 2 Lewis Corporation Traditionally used inventory valuation method: FIFO Uses periodic inventory system 3 Inventory Transaction 2005-2007 No. of Cartons Price per Carton 2005 2006 2007 2005 2006 2007 Beginning balance 1840 1020 1040 $20.00 Purchases 600 700 1000 $20.25 $21.50 $22.50 800 700 700 $21.00 $21.50 $22.75 400 700 700 $21.25 $22.00 $23.00 200 1000 700 $21.50 $22.25 $23.50 Sales 2820 3080 2950 $34
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No drop in sales for 2008. • Selling and administrative expenses remain constant. • Increase in sales price by 15% as inventory price increased by more than 30% on average. Considering the following assumptions we calculate the income with LIFO and FIFO method. Inventory: Inventory 2007 2008 Units Per Unit Cost in $’000 Units Per Unit Cost in $’000 Beginning Inventory 15000 900 13500 15000 900 13500 Purchases‚ Q1 10000 1000 10000 10000 1400 14000 Purchases‚ Q2 10000
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IV D. I‚ II and III 5. For Control Furniture Co.‚ LIFO Reserve in Year 2006 $91 million LIFO Reserve in Year 2005$82 million Tax Rate is 35%. To restate Year 2006 LIFO inventories to a FIFO basis‚ we use the following analytical entry: A. Option A B. Option B C. Option C D. Option D The following information can be found in ABC Co.’s financial statements. Assume a tax rate of 35%. Inventories valued using the LIFO method represented approximately 80% of consolidated inventories
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