BUAD 280 Week 8 Notes
BUAD 280 Week 8 Notes BUAD 280
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This 1 page Class Notes was uploaded by Manisha Malhotra on Monday October 10, 2016. The Class Notes belongs to BUAD 280 at University of Southern California taught by Eric Allen in Fall 2016. Since its upload, it has received 4 views. For similar materials see Introduction to Financial Accounting in Business at University of Southern California.
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Date Created: 10/10/16
BUAD 280 Week 8 Notes (10/10) • purchase, purchase discounts, returns • beg inv + purchases (goods available for sale) COGS = end inv • inventory valuation method that we calculate the dollar amount of COGS + ending inventory reported on the financial statements • 1) specific identification • 2) first in first OA (FIFO) • 3) last in first out (LIFO) • 4) average cost • specific identification company goes in and identifies the specific items that were sold • FIFO assumes the oldest purchases are sold first. ending inventory is composed of the most recent items • LIFO assumes the most recent purchases are sold first so ending inventory is composed of the oldest items • average cost assumes the cost of goods sold is equal to the average cost of goods available for sale • to maximize gross profit you choose the inventory valuation method that minimizes COGS • lower of cost or market inventory is recorded at the lower of historical costs or “market value” • replacement cost purchase price of identical goods • net realizable value cash that would be received from selling the inventory minus any selling costs • if replacement cost or net realizable value are less that historical cost, record a write down • debit COGS, credit inventory (to record inventory writedown) • never record write ups, only write downs
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