Financial Accounting – Inventory Costs

Name: Financial Accounting – Inventory Costs
Rating: 4.5 (352 reviews)

Mastering Inventory Costs & Flows: An In-Depth Guide to Accounting for Inventory in Business Operations

Created byRobert (Bob) Steele

Last updated 6/2019

English

What you'll learn

Understand and accurately track different types of inventory costs including freight, insurance, and purchase discounts.
Implement and distinguish between different inventory flow methods: Specific Identification, First-In-First-Out (FIFO), Last-In-First-Out (LIFO), and Weighted A
Recognize the differences, advantages, and disadvantages between periodic and perpetual inventory systems.
Apply FIFO, LIFO, and weighted average methods in both periodic and perpetual systems.
Develop a solid understanding of key definitions and terms related to inventory accounting.
Demonstrate the application of these concepts through a comprehensive problem involving all the topics covered.
Engage in meaningful discussions about inventory management, cost flows, and their impacts on financial statements.
Improve problem-solving skills with short calculation practice questions and multiple-choice questions.
Utilize Excel for managing and calculating inventory-related tasks efficiently.
Interpret and create financial reports pertaining to inventory in a real-world context.

Course content

11 sections • 96 lectures • 12h 33m total length

Introduction5:42
Explores inventory costs, tracking, and cost flow methods across periodic and perpetual systems. Covers first in first out, last in first out, and weighted average, capitalization decisions, and accounting cycle.

Inventory Tracking & Inventory Methods0:41
Discover inventory tracking concepts and common tracking methods, including specific identification, FIFO, LIFO, and weighted average methods.
PDF - 10 600 Inventory Tracking Explained - Introduction-Specific Ide0:08
10 600 Inventory Tracking Explained - Introduction-Specific Ide6:09
PDF - 15 600 Inventory Methods Explained and compared FIFO LIFO Ave0:08
15 600 Inventory Methods Explained and compared FIFO LIFO Ave9:02

Inventory Cost, Principles, and Perpetual vs Periodic Methods1:28
PDF - 17 Inventory Costs0:08
Download the pedia file to supplement the instructional video, providing additional reference material and a clearer understanding of the topics covered.
17 Inventory Costs8:39
Determine what to include in inventory costs, such as purchase price, freight under f.o.b. terms, tariffs, storage, insurance, discounts, and consignment, applying conservatism to damaged or obsolete items.
PDF - 20 Consistency Concept0:08
20 Consistency Concept3:46
PDF - 30 Lower of Cost or Market0:08
Access a downloadable pedia file that supplements the instructional video on the lower of cost or market in inventory costs.
30 Lower of Cost or Market4:04
PDF - 40 Perpetual & Periodic Inventory Systems0:08
40 Perpetual & Periodic Inventory Systems10:14
Discussion Question 1 Inventory Cost2:58

Periodic System First In First Out (FIFO)0:32
Explore the periodic system and the first in, first out cost flow assumption, where items purchased first are sold first, with a note that similar principles appear in perpetual systems.
PDF - 42 First In First Out (FIFO) Periodic System0:08
42 First In First Out (FIFO) Periodic System34:17
Learn FIFO under a periodic system, compare with perpetual and other cost flow methods, using a detailed worksheet to compute purchases, ending inventory, and cost of goods sold.
Excel Download0:05
Worksheet FIFO Periodic System47:53
Discussion Question 2 - Inventory Cost7:31
Explore how inventory costing methods—FIFO, LIFO, and average cost—along with specific identification, affect assets and cost of goods sold under rising prices.
Accounting Comic Break0:14

Periodic System Last In First Out (LIFO)0:49
PDF - 44 Last In First Out LIFO Periodic0:08
Explore the pdf resource on last in, first out lifo periodic inventory costing, with a downloadable pedia file to supplement the instructional video.
44 Last In First Out LIFO Periodic34:10
Explore last in, first out LIFO in a periodic inventory system, tracking beginning inventory, purchases, ending inventory, and cost of goods sold, with comparisons to FIFO and average.
Excel Download0:05
Worksheet Last In First Out (LIFO) Periodic System44:44
Discussion Question 3 Inventory Cost6:15
Compare the perpetual and periodic inventory systems, noting how perpetual updates sales and cost of goods sold, while periodic relies on end-of-period physical counts.
Multiple Choice 1 - Inventory Cost9:19

Perpetual System First In First Out (FIFO)0:37
PDF 50 600 First In First Out FIFO Explained0:08
Discover how first in, first out is explained in this lecture and access a downloadable supplementary file to reinforce key concepts in inventory costs.
50 600 First In First Out FIFO Explained9:12
Excel Download0:05
600.10 Inventory Cost Problem First In First Out part 1 Ex.%2C how to calculate11:01
600.20 Inventory Cost Problem First In First Out part 2 Ex.%2C how to calculate-12:05
Discussion Question 5 Inventory Cost5:01
Multiple Choice 3 - Inventory Cost9:34

Perpetual System Last In First Out LIFO0:36
PDF - 60 600 Last In First Out LIFO Inventory Method Explained0:08
60 600 Last In First Out LIFO Inventory Method Explained7:41
Excel Download0:05
600.50 Cost Problem Last In First Out LIFO part 1 Ex.%2C how to calculate-Accoun10:02
600.60 Cost Problem Last In First Out LIFO part 2 Ex.%2C how to calculate-Accoun10:09
Discussion Question 6 Inventory Cost4:44
Multiple Choice 4 - Inventory Cost15:28
Short Calculation Test Questions 112:01
Compute ending inventory and cost of goods sold under a weighted average perpetual system, using purchases, sales, and unit costs; apply first-in, first-out and adjust inventory errors.

Perpetual System Weighted Average Method0:41
PDF - 70 600 Average Inventory Method Explained0:08
Download the supplementary pdf from the next presentation and use it with the instructional video to understand the average inventory method.
70 600 Average Inventory Method Explained7:03
Excel Download0:05
600.30 Inventory Cost Problem Average method Part 1 Ex.%2C how to calculate-Acco10:01
600.40 Inventory Cost Problem Average method Part 2 Ex.%2C how to calculate8:47
Learn to apply the average method to compute and update per-unit inventory cost from multiple purchases, including recording accounts payable and cost of goods sold to assess net income.
Discussion Question 7 Inventory Cost4:01
Explain how to apply the lower of cost or market rule to inventory, recording at cost and writing down to replacement cost when lower, guided by conservatism and regulatory goals.
Multiple Choice 5 Inventory Cost10:57
Short Calculation 215:40
Compute inventory values using the lower of cost or market, apply perpetual FIFO to determine cost of goods sold and ending inventory, and use the gross profit method for estimates.

Definitions & Key Terms0:51
Average Cost Definition - What is Average Cost%3F4:34
Conservatism Constraint Definition - What is Conservatism Co2:14
Consignee Definition - What is Consignee%3F2:32
Consignor Definition - What is a Consignor%3F2:39
Consistency Concept Definition - What is Consistency Concept2:32
Define the consistency concept as using the same inventory cost flow method over time to keep financial statements comparable across periods, avoiding switches between FIFO, LIFO, specific identification, or average.
Days Sales in Inventory Definition - What is days sales in i2:03
First in First out Definition FIFO - What is First in First3:48
Gross Profit Definition - What is Gross Profit%3F (1)2:18
Define gross profit as net sales minus cost of goods sold, expressed on multistep income statements to show the relationship between net sales, inventory costs, and gross margin.
Interim Financial Statements Definition - What are Interim Financial Statements%2:09
Inventory Turnover Definition - What is Inventory Turnover%3F1:49
Last in First Out LIFO Definition - What is Last in First ou3:32
Lower of Cost or Market Definition - What is Lower of Cost o1:51
Net Realizable Value Definition - What is Net Realizable Val2:17
Retail Inventory Method Definition - What is Retail Inventory Method%3F3:26
Specific Identification Definition - What is Specific Identi3:31
explain specific identification as assigning exact costs to each inventory item to compute cost of goods sold, with a forklift example, and note alternatives like fifo, lifo, or average.
Weighted Average Definition - What is Weighted Average Metho4:04
Multiple Choice 6 Inventory Cost15:47

Requirements

Basic understanding of Accounting: Students should be familiar with fundamental accounting principles and concepts. Prior completion of an introductory accounting course is recommended.
Commitment to Learning: The course covers complex topics that require focus and dedication. Students should be prepared to actively participate in discussions and complete the practice exercises.
Access to a computer: The course materials include downloadable PDF files and Excel practice files. A computer will be necessary to access and utilize these resources.

Description

Welcome to our comprehensive course on Inventory Cost & Flow - Fundamental Accounting Concepts. This detailed course delves into the essentials of inventory costs and cost flows, offering an all-inclusive understanding of how to account for various inventory-related expenses and the dynamics of inventory flow assumptions.

Our in-depth course explores all facets of inventory costs, guiding students on what costs should be included in the inventory. We scrutinize the methods of accounting for freight costs, insurance costs, and purchase discounts associated with inventory, shedding light on how these factors affect the overall inventory value.

A key feature of the course is the detailed examination of inventory flow assumptions. We study various methodologies, including specific identification, first in first out (FIFO), last in first out (LIFO), and weighted average methods. To provide a thorough understanding, these methods are explored under the lens of both periodic and perpetual inventory systems.

An array of downloadable resources like PDF files, Excel practice files, multiple-choice questions, and short calculation questions complement the instructional video content. These resources facilitate offline learning, practical application, test-taking skills enhancement, and problem-solving. Discussion questions further enrich the learning experience, offering the opportunity for interactive dialogue with the instructor and fellow students.

The course is imparted by an experienced accounting professional and educator, with impressive credentials such as CPA, CGMA, Master of Science in Taxation, CPS, and expertise in curriculum development. The instructor's rich experience in technical accounting issues and teaching a range of accounting classes ensures a high-quality learning experience.

Throughout the course, we will pivot around key definitions and terms related to inventory costing and flows, ensuring that students have a robust theoretical foundation. The learning journey culminates in a comprehensive problem-solving module where students can apply their knowledge to practical scenarios.

This course provides the perfect blend of theory and practice, making it ideal for anyone seeking a deep understanding of inventory costs and flows within the realm of fundamental accounting. We look forward to having you onboard!

Who this course is for:

Business students who are currently pursuing a degree and wish to gain a comprehensive understanding of inventory management in accounting, especially as it relates to FIFO, LIFO, and weighted average methods.
New accountants or accounting trainees who want to augment their understanding of inventory accounting methods and their application in both periodic and perpetual inventory systems.
Small business owners or managers who are involved in inventory management and wish to understand how different accounting methods can impact their financial reporting and decision-making.
Any individual preparing for accounting certification exams (like CPA or CMA) and seeking in-depth knowledge about inventory cost flow assumptions and systems.
Professionals in the finance or accounting field who want to update their knowledge or need a refresher course on inventory accounting.

Financial Accounting – Inventory Costs

What you'll learn

Explore related topics

Course content

Introduction1 lecture • 6min

Inventory Tracking & Inventory Methods5 lectures • 16min

Inventory Cost, Principles, and Perpetual vs Periodic Inventory Systems10 lectures • 32min

Periodic System First In First Out (FIFO)7 lectures • 1hr 31min

Periodic System Last In Last Out (LIFO)7 lectures • 1hr 36min

Periodic Weighted Average Method7 lectures • 1hr 37min

Perpetual System Fist In First Out (FIFO)8 lectures • 48min

Perpetual System Last In First Out (LIFO)9 lectures • 1hr 1min

Perpetual System Weighted Average Method9 lectures • 57min

Definitions & Key Terms18 lectures • 1hr 2min

Requirements

Description

Who this course is for: