Albrecht Ch 7 SM Final.docx
- 文档编号:17624827
- 上传时间:2023-07-27
- 格式:DOCX
- 页数:66
- 大小:72.18KB
Albrecht Ch 7 SM Final.docx
《Albrecht Ch 7 SM Final.docx》由会员分享,可在线阅读,更多相关《Albrecht Ch 7 SM Final.docx(66页珍藏版)》请在冰点文库上搜索。
AlbrechtCh7SMFinal
CHAPTER7
DISCUSSIONQUESTIONS
1.Amanufacturingfirmhasthreetypesofinventories:
(1)rawmaterials,
(2)work-in-process,and(3)finishedgoods.Rawmaterialsaregoodsacquiredinanundevelopedstatethatcomposeamajorpartofafinishedproduct.Work-in-processinventoryisthepartlyfinishedproducts.Finishedgoodsarethecompletedproductswaitingforsale.
2.Thecostofinventoryconsistsofallthecostsinvolvedinbuyingandpreparingmerchandiseforsale.Foramanufacturingcompany,inventorycostforrawmaterialsgenerallyincludesthepurchasepricepaidforthematerials,freightcosts,andreceivingandstoragecosts.Thecostofwork-in-processinventoryincludesthecostofrawmaterials,thecostofproductionlabor,andsomeshareofthecostofthemanufacturingoverheadrequiredtokeepthefactoryrunning.Thecostoffinishedgoodsinventoryisthetotalofthematerials,labor,andmanufacturingoverheadcostsusedintheproductionprocessforthoseitems.
3.Itismoredifficulttoaccountfortheinventoryofamanufacturingfirmthanforamerchandisingfirmbecausetheformerhasthreedifferenttypesofinventories:
rawmaterials,work-in-process,andfinishedgoods.Inaddition,thework-in-processandfinishedgoodsinventoriesarecomposedofrawmaterials,labor,andmanufacturingoverhead.Often,itisdifficulttomeasuretheamountoflaborandmanufacturingoverheadthatshouldbeincludedintheinventoryamounts.
4.ThebuyerownsmerchandisebeingshippedunderthetermsFOBshippingpoint;thus,thebuyerwouldgenerallypaytheshippingcostsandberesponsibleforanyotherownershipcostsduringshipping.
5.Thecostofinventoryistransferredfromanassettoanexpensewhentheinventoryissold.Untilsold,inventoryisacurrentassetonthebalancesheet.Whensold,itbecomespartofthecostofgoodssoldontheincomestatement.
6.Withgoodinternalcontrolprocedures,aperpetualinventoryrecordprovidesbettercontroloverinventorybecauseitalwaysshowstheamountofinventorythatshouldbeinthewarehouse(exceptfortheft).Aperiodicinventoryrecordshowsonlytheamountofinventorythatwasonhandatthebeginningoftheperiod.Withtheperiodicmethod,theinventoryaccountisnotadjusteduntilthenextphysicalcountistaken,usuallyattheendofanaccountingperiod.
7.Purchasediscountsandpurchasereturnsareaccountedfordifferentlywiththetwomethods.Withtheperiodicmethod,bothdiscountsandreturnsareaccountedforbyusingseparateaccounts(PurchaseDiscountsandPurchaseReturns);thesearecontraaccountstothepurchasesaccount.Withtheperpetualmethod,discountsandreturnsareaccountedforbycreditingInventorydirectly.Sinceaperpetualinventoryaccountalwaysshowstheamountofinventorythatshouldbeonhand,wheninventoryisreturnedtosuppliers,theinventoryaccountmustbedecreased.
8.Thecostsoftransportinginventoryintoafirmarenottreatedinthesamewayasthecostsoftransportinginventoryout.Thecostsoftransportinginventoryintothefirmaretreatedasanadditiontothecostsofinventory,whereascostsoftransportinginventoryoutofthefirmaredeliveryexpenses(operatingexpenses).Thereasonforthedifferenttreatmentsisthatthetotalcostofinventoryistheamountpaidfortheinventoryplusthosecostsnecessarytogetitreadyforsale.Forexample,ifacompanylocatedinSanFranciscobuysinventoryinChicago,thatinventorywillnotbeworthanythingtothefirmuntilitisinSanFranciscoandreadyforsale.Thus,thetotalcostoftheinventoryisthesumofthepurchasepriceandtheshippingcosts(freightin).
9.Missingapurchasediscountraisesthecostofinventory.Increasedinventorycostultimatelymeanshighercostofgoodssoldandlowernetincome.
10.Withaperpetualsystem,Inventoryisalreadyadjustedtoitsendingbalance(unlessthereistheftorshrinkage)becausetheinventoryaccountisadjustedwiththerecordingofeverysaleandpurchasetransaction.Withaperiodicsystem,theinventoryaccountmustbeadjustedattheendoftheperiodbecausenoadjustmentshavebeenmadetotheinventoryaccountthroughouttheperiod.Theclosingprocess,underaperiodicmethod,involvesclosingNetPurchasestoInventoryandthenadjustingInventorytotheappropriateamount.Throughthisprocess,thepurchasesandpurchase-relatedaccountsareclosed,theinventoryaccountisadjustedtoitsendingbalance,andthecostofgoodssoldamountendsupinthecostofgoodssoldaccount.
11.Eventhoughperpetualinventoryrecordsshouldalwaysreflecttheamountofinventoryactuallyonhand,theinventorystillneedstobecountedtodiscovertheextentoftheft,spoilage,andclericalerrors.Also,aphysicalcountisagoodwaytoidentifywhichinventoryisobsolete,broken,damaged,orslowselling.
12.Theonlyadjustingentryrequiredtoaccountforinventorywiththeperpetualmethodistheentrytoreflectanyshortageoroveragefromtheft,obsolescence,andaccountingerrors.Allotherentriestotheinventoryaccountaremadewhenmerchandiseispurchased,sold,orreturned,orwhendiscountsaregranted.
13.Whengoodsbeingheldonconsignmentareincludedintheendinginventorybalance,inventoryisoverstated.Whenendinginventoryisoverstated,costofgoodssoldisunderstated,andtheresultisanoverstatementofbothgrossmarginandnetincome.
14.“Movementofgoods”referstotheflowoftheactualinventorythroughthefirm;“costflow”referstotheflowofthecostsoftheinventory.AfirmmayhaveaFIFOphysicalflowpatternfortheinventory,butmayuseFIFO,LIFO,oraveragecostforcostingtheinventory.
15.TheLIFOinventorycostingalternativeresultsinpayingthelowesttaxeswhenpricesarerising.WithLIFO,themostcurrentcosts(andthemostexpensivewhenpricesarerising)flowtotheincomestatement.
16.Afirmcannotalwaysuseoneinventorycostingalternativefortaxpurposesandanotherforfinancialreportingpurposes;theIRShasruledthatfirmsusingLIFOfortaxpurposesgenerallymustuseitforfinancialreportingpurposesaswell.
17.Itisnecessarytoknowwhichinventorycostflowalternativefirmsareusingbeforecomparingtheirfinancialrecordsbecausethecostingmethodcanindicatehowcloselythereportedinventoryamountsreflectcurrentinventorycosts.Forexample,afirmusingLIFOduringinflationaryperiodswillprobablyhaveveryoldinventorycostsonitsbalancesheet,butitsincomestatementwillquiteaccuratelyreflecttheamountofrealnetincomeearned.Ontheotherhand,afirmthatusesFIFOwillshowrelativelyaccuratecurrentcostsofinventoryonthebalancesheet,butitsincomestatementwillshownetincomethatisunrealisticallyhighbecausethecostofgoodssolddoesnotconsistofcurrentcosts.Intryingtocomparetwofirms,oneusingFIFOandoneusingLIFO,thedifferencesintheinventoryandnetincomeamountsmightresultmorefromhowinventorycostsarehandledthanfromdifferencesinamountsofinventoryonhandortheprofitabilityofthecompany.
18.Theinventoryturnoverratiorevealshowfastinventoryissold—howlonginventoryisbeingheldbeforeitissold.Holdingotherthingsconstant,theinventoryturnoverratiocanprovideapreliminaryindicationofhowwelltheorganizationismanagingitsinventory.
19.*Wheninventoryisnotrecordedasapurchasebutisincludedintheinventorybalance,theamountofnetincomeisoverstated.Asshownhere,anunderstatementofthepurchaseamountresultsinanunderstatementofcostofgoodssoldandacorrespondingoverstatementofbothgrossmarginandnetincome.
Beginninginventoryxxx(OK)
+Netpurchasesxxx(understated)
=Costofgoods
availableforsalexxx(understated)
–Endinginventoryxxx(OK)
=Costofgoodssoldxxx(understated)
Grossmarginxxx(overstated)
Netincomexxx(overstated)
*Relatestoexpandedmaterial.
20.*Wheninventoryissoldandshippedbutnotrecordedasasale,netincomewillbeunderstated.Asshownbelow,whensalesareunderstatedandnetcostofgoodssoldiscorrect,thegrossmarginandnetincomewillbeunderstated.
Salesrevenuexxx(understated)
Costofgoodssold:
Beginninginventoryxxx(OK)
+Netpurchasesxxx(OK)
=Costofgoods
availableforsalexxx(OK)
–Endinginventoryxxx(OK)
=Costofgoodssoldxxx(OK)
Grossmarginxxx(understated
because
ofsales)
Netincomexxx(understated
because
ofsales)
21.*AlthoughthecostsoftheunitsonhandandsoldaftereachtransactionarethesameunderFIFOperpetualandFIFOperiodic,computationofaveragecostandLIFOunderaperpetualsystemchangeseverytimeapurchaseismade.Withaperpetualsystem,theexacttimingofthesepurchasesistrackedthroughouttheperiod;withaperiodicsystem,thecomputationsaremadeonlyattheendoftheperiod.
22.*Inventoryshouldbevaluedatitsnetrealizablevaluewhenitisdamaged,used,orobsolete.Thenetrealizablevalueisthe
amountthatcouldberealizedfromthesaleofthemerchandise.Writinginventorydowntoitsnetrealizablevaluebeforeitssaleistheconservativeapproachbecauseitrecognizeslossesoninventorywhentheyoccurinsteadofwhentheinventoryissold.Italsoguaranteesthatinventorieswillnotbecarriedonthebooksatamountsthatexceedtheirfutureeconomicbenefits.
23.*Inventoryisalwaysvaluedatthelowerofcostormarket.Ifthereplacementpriceofinventorydropssignificantlybelowthecost,itmustbewrittendowntomarket(replacementcost)sothatthenormalprofitcanberealizedwhenthemerchandiseisfinallysold.Thisapproachisrequir
- 配套讲稿:
如PPT文件的首页显示word图标,表示该PPT已包含配套word讲稿。双击word图标可打开word文档。
- 特殊限制:
部分文档作品中含有的国旗、国徽等图片,仅作为作品整体效果示例展示,禁止商用。设计者仅对作品中独创性部分享有著作权。
- 关 键 词:
- Albrecht Ch SM Final