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Texas State - ACC 2361 - Class Notes - Week 7

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Texas State - ACC 2361 - Class Notes - Week 7

School: Texas State University
Department: Engineering
Course: Intro to Financial Accounting
Professor: Elizabeth Ponder
Term: Spring 2018
Tags: Accounting and inventory LIFO FIFO
Name: ACC2361, Week 7
Description: Chapter 7 notes that will be on exam 2.
Uploaded: 03/05/2018
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background image Chapter 7: Inventory and Cost of Goods Sold
Seller’s Accounting: Journal Entry Connection from Chapter 6:
Focus: calculating the amount (of the debit and credit) to record Cost of Goods Sold Debit: Cost of Goods Sold(CGS)* Credit: Inventory* *Entered into Vend system as “supply cost” Components of POS Systems­ Our Focus: Sales Reporting and Inventory Management Sales Reporting­ record and analyze sales data to make informed business decisions Customer Management log purchases and keep in touch with customers through  marketing tools  Inventory Management­ manage quantity of stock to determine when and how often to  reorder products Employee Management­ provide clock in/out tools and manage scheduling and payroll Inventory Costing: Inventory items are often purchased at different costs due to changing prices GAAP does not require the cost assigned to inventory sales to match the exact cost paid A cost flow assumption is adopted for determining inventory cost The cost flow assumption doesn’t have to match the physical flow of items out of  inventory Specific Identification­ the inventory costing method that identifies the cost of the specific item 
that was sold
First­in, First­Out (FIFO)­ assumes that the costs of the first goods purchased (first in) are the 
costs of the first goods sold (first out)
Last­in, Last­out (LIFO)­ assumes that the costs of the last goods purchased (last in) are the 
costs of the first goods sold (first out)
Weighted Average Cost­ an inventory costing assumption that uses weighted average unit cost 
of the goods available for sale for both cost of goods sold and ending inventory
Calculation Steps Using Cost Flow Methods:
1. Starts with Beginning Inventory (units and costs)
2. Enter purchases (units and costs)
3. Scan units sold
4. Calculate CGS (units sold*unit cost)*

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School: Texas State University
Department: Engineering
Course: Intro to Financial Accounting
Professor: Elizabeth Ponder
Term: Spring 2018
Tags: Accounting and inventory LIFO FIFO
Name: ACC2361, Week 7
Description: Chapter 7 notes that will be on exam 2.
Uploaded: 03/05/2018
2 Pages 16 Views 12 Unlocks
  • Better Grades Guarantee
  • 24/7 Homework help
  • Notes, Study Guides, Flashcards + More!
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