Inventory is considered an asset on the balance sheet. Accurate inventory is important.
Types of Inventory (04:25)
Learn the three main types of inventory that are considered assets. Vocabulary includes FOB destination, FOB shipping point, and goods on consignment.
Inventory Assessment and System (03:33)
Inventory assessment occurs on a periodic or perpetual basis. Vocabulary includes COGS (cost of goods sold), indirect expenses, gross margin, general ledger, and periodic physical count.
Costing Methods (04:52)
COGS (cost of goods sold) can be deducted for revenue. Learn the three main costing methods. Vocabulary includes FIFO, LIFO, weighted cost method, specific identification method,
Costing Methods in Action (01:50)
Learn how a paint company would use FIFO, LIFO, and the weighted method for inventory. LIFO results in the lowest income.
Specific Identification Method of Inventory Costing (01:29)
This method requires that every unit be identified with a specific cost; see an example of this method at a jewelry store.
Conservatism and Inventory (01:35)
Learn how conservatism is applied to inventory. Vocabulary includes recorded cost, lower market value (LCM), and write down.
Inventory Adjustments and Estimates (06:05)
Businesses should perform an occasional physical account of inventory. Learn how to estimate loss. Vocabulary includes gross profit method and retail method.
Credits: Managing Inventory: Accounting Fundamentals (00:25)
Credits: Managing Inventory: Accounting Fundamentals
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