Scribd
Upload
8 views8 pages

Inventory Accounting a Comprehensive Overview

Uploaded by

septiansaputra791
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
8 views8 pages

Inventory Accounting a Comprehensive Overview

Uploaded by

septiansaputra791
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 8

Inventory Accounting: A

Comprehensive Overview
This presentation provides an overview of inventory accounting
principles and practices. It delves into the significance of effective
inventory management, explores various inventory valuation
methods, and examines inventory control techniques.
Understanding the Importance of Inventory
Management
Cost Optimization Customer Satisfaction

Effective inventory management minimizes holding Maintaining adequate inventory levels ensures timely
costs, storage expenses, and obsolescence risks, leading delivery to customers, meeting their needs and fostering
to cost optimization and improved profitability. strong customer relationships.
Types of Inventory: Raw
Materials, Work-in-
Progress, and Finished
Goods
Raw Materials Work-in-Progress
Basic components used in Partially completed goods
production processes. undergoing production.

Finished Goods
Completed products ready for sale.
Inventory Valuation
Methods: FIFO, LIFO, and
Weighted Average

FIFO
First-In, First-Out: Assumes that the oldest inventory is sold first.

LIFO
Last-In, First-Out: Assumes that the newest inventory is sold first.

Weighted Average
Calculates the average cost of all inventory items.
Inventory Cost Flow
Assumptions and Their
Impact
FIFO
1
Higher profit during inflation.

LIFO
2
Lower profit during inflation.

Weighted Average
3
Smoother cost flow, less susceptible to price
fluctuations.
Inventory Control Techniques: Economic Order
Quantity (EOQ) and Just-in-Time (JIT)

1 2

EOQ JIT
Determines the ideal order size to minimize ordering Aims to receive materials just in time for production,
and holding costs. reducing storage and waste.
Inventory Shrinkage and Losses: Causes and
Prevention

1 Theft

2 Damage

3 Obsolescence
Reporting Inventory in
Financial Statements and
Regulatory Requirements

1 2
Balance Sheet Income Statement
Inventory is reported as a Cost of Goods Sold reflects the
current asset. cost of inventory sold during the
period.

You might also like