Course Details
Course Outline
5 days course
Introduction to inventory
- Current assets and inventory management
- The four reasons for keeping inventory
- Inventory cycle from purchases to sales:
- Ordering and receiving
- Sales and delivery
- Best practices in count process
- Inventory industry types: merchandise, manufacturing, construction and real estate
- Differences between inventory, fixed assets and investment properties
- Understanding and analyzing inventory ratios
Accounting for Inventory
- Perpetual versus periodic inventory methods
- Cost accounting versus financial accounting
- Cost allocation techniques:
- Direct material, direct labor and manufacturing overhead
- Initial recognition
- Cost of purchase, cost of conversion and treatment of discounts and rebates received
- Measurement after recognition
- Calculating ‘net realizable value’ (IFRS)
- Calculating market price under the Lower of Cost or Market (LCM) method (GAAP)
- Estimating and booking write downs for slow moving and obsolete inventory
- Accounting for write backs of impairment under IFRS and GAAP
- Accounting for errors identified in physical count
Accounting for Inventory: Special Topics
- Accounting for inventory not on hand
- On consignment
- Goods in-transit: defining incoterms
- Sold with right of return
- Sold subject to installation and inspection
- Sold on a ‘bill and hold’ basis
- The concept of ‘inventory credit’: inventory used as collateral to raise finance
- Impact of accounting policies changes on financial statements
- Inventory required disclosures
Inventory Cost Flow Assumptions
- First-in First-out (FIFO) and Last-in First-out (LIFO)
- Weighted average and moving average
- Specific identification
Inventory Estimation and Cost Accounting Approaches
- Inventory estimation techniques
- Gross profit method
- Retail method
- Cost accounting approaches
- Traditional costing versus activity based costing
- Target costing versus cost plus pricing method
- Standard cost accounting
- Throughput accounting
- Using Excel for efficient analysis of inventory
- Consolidating your inventory data
- Validating data for accuracy
- Analyzing slow moving and obsolete inventory
- Tests of recalculating weighted average and moving average costs
- Using pivot tables to efficiently analyze and report on inventory issues
